Deregulation Bill

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Tuesday 3rd February 2015 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I will not recap at length the points I made in Committee. Suffice it to say that tourism contributes 9% of all UK GDP and 9% of all jobs: 3 million people rely on it for work. Domestic tourism spending is a significant portion of this—79% of tourism spending across the UK. I made the point in Committee that domestic changes in school term times have a potentially massive knock-on effect for the UK tourism industry as a whole. In the US, there are numerous examples of states changing term times and the huge effect that has had, costing state economies hundreds of millions of dollars annually.

DCMS has admitted that there has been no evaluation of the policy’s effect on tourism. Tourism is heavily reliant on the weather, and it is not uncommon for summer trading to be ruined, for example, by two weeks of bad weather. Decreasing the length of the summer holiday to, say, four weeks would be far more devastating than a simple one-third reduction of the peak period. Diversifying the dates of holidays does not lengthen the peak period but simply spreads out the same trade while increasing operating costs.

Assurances have been given to the British Association of Leisure Parks, Piers and Attractions—BALPPA—by the Department for Education, and indeed by my noble friend in Committee on 6 November, that the needs of businesses will be considered. However, does this actually amount to an assurance that consultation will take place before changes are made? Surely, at the very least, the duty to do so should be contained in guidance or, much better, enshrined in the Bill.

By their nature, tourism attractions bring people in from beyond the immediate locality. Often, they attract people into towns from the region and beyond. Changing school times throughout the whole of Manchester would, for example, affect attractions across the north-west, including those in Blackpool and Liverpool. There is concern that when schools want to use these powers, they will not have the concerns of local businesses in mind. We need to give the tourism industry more confidence in this legislation, which is viewed with a great deal of concern at the moment. The effect of changes to school terms and holidays is potentially huge for the industry. We should therefore make sure that school governing bodies consult when they propose to make any such changes. I urge my noble friend to accept the principle of this amendment and I beg to move.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I have a great deal of sympathy for what the noble Lord has just said. Indeed, we discussed this at some length in Committee. I have only one point and when the Minister responds I would be grateful if he could expand on the comments that he made in Committee. He said:

“I am happy to assure the noble Lord that the Government have agreed that their advice to schools will make clear that: schools should be considerate of the needs of parents and impacts on others by working with each other and the local authority to co-ordinate term dates as far as possible; and that all schools must act reasonably when setting term dates, including considering the impact of changes to term dates on small businesses that rely on tourism from families with school-age children”.—[Official Report, 6/11/2014; col. GC771.]

That is a very targeted comment and seems in many ways to answer everything that the noble Lord was saying, but I wonder what force this advice will have? Will it be in the form of a circular of some type? Can he expand on that? Will there be any sanctions for those who do not behave to the letter of the law, as so well expressed by the noble Lord the last time round? Particularly, would Ofsted be inspecting such offers made by schools?

Consumer Rights Bill

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Wednesday 19th November 2014 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, Amendment 16 stands in my name and in the name of my noble friend Lady Hayter of Kentish Town. Digital sales are booming and the digital music, video and games market now accounts for 43% of the total UK entertainment sector. Recent research puts the UK as the leading European country for total digital spent per capita. This is indeed the future.

The main focus of Amendment 16 is the question of whether, when digital content is provided in an intangible form and does not meet quality standards, the consumer should, as the Government propose, be restricted simply to a right of repair or replacement. We believe very strongly that, in addition, the consumer should in such cases have both a short-term and a long-term right to reject the digital content. The Government’s argument is that where digital content is downloaded or streamed, it is not provided on a tangible medium and therefore cannot be returned in any meaningful sense. Passing over the obvious metaphysical absurdity of believing that only physical objects can be meaningful, that is inconsistent—not least because consumers will have a short-term and a long-term right to reject the identical digital content if it is bought on a tangible medium, such as a DVD or CD.

As the BIS Select Committee commented when it was reviewing the draft Bill:

“The different remedies available for tangible and intangible digital content in the bill would … embed inconsistency into consumer law. Consumers experience intangible digital content in the same way as tangible digital content, as a good, and therefore would expect to be able to reject it and receive a refund if the statutory rights are not met”.

Well, they can get a refund, but they cannot reject it. It cannot be sensible for the Government to be sanctioning two different regimes for tangible and intangible goods and services, and I very much doubt that the courts will support that.

The department has produced and circulated a useful note on this whole issue, for which I am very grateful. I am also grateful to the Minister, who wrote to me after the debate we had on this issue in Committee. That was also extremely helpful and informative. However, it is a question of consistency and equity not whether we can analyse this or parse it to the last extent. The right thing to do here is to provide the same rights for all faulty purchases, tangible or intangible, while recognising that any short-term or long-term right to reject needs to be matched by a requirement placed on the consumer to delete the content and, if that is impracticable, to desist from use or copying. There are already remedies in law that would match this issue.

The BIS adviser on this issue, Professor Robert Bradgate, who sadly, I recently learnt, died before he could see his recommendations implemented, recognised that problem in his initial report and suggested that it should be tackled by,

“an extension of the definition of goods to apply provisions of the Act both to goods, and to digital products … and to include power in the … legislation for Her Majesty’s Secretary of State to apply the Act by Statutory Instrument to new developments as they arise”.

That remains good advice. I beg to move.

[Lord Clement-Jones]

My Lords, I am not sure whether the noble Lord, Lord Stevenson, will thank me for making an even shorter speech than I made in the previous debate. I must say that my breath is somewhat taken away by the sweeping nature of the amendment, which tries to sweep all digital content into the clauses on the sale of goods. The software industry may have some difficulty with some areas of Chapter 3 on digital content, but if what the noble Lord wants happened, it would be horrified. The dialogue between the software industry and the Government may not have produced everything that the software industry wants, but it has recognised that digital content is very different. I forewarned the noble Baroness, Lady King, that I would cite her. Like me, she said:

“I will not speak at length on this amendment or the other amendments … but it seems worth reiterating the peculiar nature of digital content”. [Official Report, 20/10/14; col. GC 183.]

Although I do not have the exact reference, I entirely agree with her. The noble Lord, Lord Knight, made similar points about the peculiar nature of digital content. It would be an extremely retrograde step to sweep up the additional content in this. If the noble Lord had come with individual amendments to the clauses to bring digital content in, I might have been more sympathetic, because one then could have seen the exact consequences of the amendments, but the consequences of this amendment could be quite unforeseen and extremely contrary to the interests of the strong and vibrant software industry that we have in this country.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, my noble friend was kind enough to quote me in her previous response, so I hope that she will go even further than that and accept an amendment from me. One lives in hope. I am indeed returning to the fray on the subject of software. I hope that when the noble Lord, Lord Stevenson, reads Hansard he will realise how accurate my quote from the noble Baroness, Lady King, was.

[Lord Stevenson of Balmacara]

I did not say it was inaccurate; I just said that it was not the complete phrase as recorded. The reference that my noble friend showed me was to bug fixes; it was not about the particularity of the need for a separate regime for returning material to digital suppliers because it was defective in some way.

[Lord Clement-Jones]

Logically, one thing follows another. That is exactly the purpose of this amendment. Indeed, I shall refer again to the speech made by the noble Baroness, Lady King, on 20 October, as recorded at column GC 183 of Hansard. It has been extraordinarily helpful in formulating the terms of this amendment.

Let me explain. Amendment 34, tabled in Grand Committee, sought to amend Clause 34 to include a provision stating that it is common for computer software to include defects due to its dynamic nature and the complex environment in which it operates. In response to that amendment my noble friend Lady Jolly asserted that,

“the Bill is flexible enough to cope with”,

the differences between complex software and simpler forms of digital content such as music. She said that “reasonable consumers” understood that complex content contains bugs, and that,

“freedom from minor defects is an aspect of satisfactory quality only ‘in appropriate cases’”.—Official Report, 20/10/14; col. GC 184.]

The Minister was clear about this in Grand Committee, but, as the Federation Against Copyright Theft has said, it is far from the case that a district court or a county court would be clear about it.

In the debate, the noble Baroness, Lady King of Bow, suggested that,

“it seems reasonable to say that where minor defects in software do not affect the overall functionality of the product, that digital content should not be deemed unsatisfactory”.—[Official Report, 20/10/14; col. GC 183.]

I agree—and the software industry agrees, and very much supports this approach, as it is much more outcome based. We have reformulated the amendment as a result, and it now says that as long as the defect does not affect the main functionality of the digital content, it should not be regarded as rendering it unsatisfactory.

My noble friend Lady Jolly questioned in Grand Committee what the driver for industry would be to improve the software if the legislation stated that some types of software contain bugs and, as such, this would not mean that the digital content was faulty. However, it is in industry’s commercial interest constantly to improve its products. In fact, to the contrary, the clause as formulated might have an adverse effect in encouraging industry not to make changes or improvements to its digital content. The consequences of strict compliance are likely to be increased costs to consumers and slower product evolution, arising from the increased time and resource required for testing. It is preferable for consumers and businesses to require that minor defects or malfunctions that may surface as a product or service is used be fixed as promptly as possible.

Amendments 18 and 19 aim to remove the risk of claims in relation to minor software glitches. Such claims are potentially expensive and time-consuming for software providers to resolve and would not benefit consumers. In Grand Committee, Amendments 37 and 38 sought to amend Clause 36 to clarify that the presence of bugs in complex types of digital content does not mean that the content is not as described. My noble friend Lady Jolly responded by commenting that,

“digital content either meets the description or … not”,

and that the amendments would undermine,

“the requirement that the digital content should be as described”.—[Official Report, 20/10/14; col. GC 186.]

My noble friend provided a simple example of a defect in software where the spellchecker no longer worked yet the software was described as having this function. With all due respect, the spellchecker example is very simplistic. It is a different situation with regard to complex software such as security software, which has to evolve over time and needs to be updated to address the myriad situations to enable the software to continue to interface with other third-party software and platforms, to continue to function or to address new vulnerabilities.

These issues were discussed during the debate in Grand Committee on Amendment 40A, moved by the noble Lord, Lord Haskel. His amendment would have amended Clause 40 to enable suppliers to make modifications to the software if they are of benefit to the consumer, remedy risks or improve functionality, irrespective of whether the modification would mean that the digital content no longer meets that description. I am pleased that the Government have partially relented on that and that, as a result, we now have government Amendment 20 to Clause 40. The supplier can now add functionality but software suppliers will still not be able to remove features. Neither Clause 36 nor Clause 40 takes into consideration that certain features may have to be removed or disabled from security software. Suppliers of security software may have to remove a function as it is in the very interest of a consumer to do so, as the function could be vulnerable to attack and this specific vulnerability could leave the consumer open to a range of threats—from a virus that will steal personal information or credit card details to malware that will infect a user’s machine, rendering it unusable and/or wiping data such as precious family photos.

Functions of security software are not removed without good reason. If suppliers do not remove a function, there are many circumstances where this will be to the detriment of consumers. I hope that my noble friend will recognise the particular circumstances of software and give her approval at least to the tenor of these amendments. I beg to move.

Legislative Reform (Entertainment Licensing) Order 2014

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Monday 17th November 2014 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for that exposition, which brings back happy memories of my Second Reading Speech on the Live Music Bill back in 2011. I wholly support the rationale for the deregulation of live music. It may have taken some time, and I must be a collector of consultations in one way or another since 2011, but it has been a very careful and stately progress towards building on the Live Music Act exemption for venues with an audience capacity of 200, which will be extended to 500 if this order goes through. It is as if, between 2012 and now, Christmas has arrived after many years of waiting under the previous Government. I remember first raising the deregulation of live music performances in 2007. I kept being told that reviews would take place. I think that a consultation paper was issued in early 2010 and thereafter, of course, a new Government took office, so I am extremely pleased to see this on foot. I thought that the original 5,000 figure was rather extravagant. I do not know whether it was aversion therapy or whatever, but certainly I expect that local authorities made their views known about the idea of deregulating an audience of up to 5,000 for live music.

There are still areas of live music which could be improved, but I was very pleased to see stated in the LRO consultation of July 2014:

“The coming into force of the Live Music Act 2012 has not negatively impacted the licensing objectives and the Government considers that having an audience limit of not more than 500 people for music entertainment in relevant premises strikes the right balance between those who welcome it, and those who have concerns about noise nuisance”.

That is a very fair and balanced approach.

I am often critical of the Government’s impact assessments, but the impact assessment that assesses the administrative savings from the reduced need to apply for licences and TENs for business and third-sector organisations states the figures at £5.9 million and £3.8 million. Over the appraisal period, that may sound slightly spuriously precise, but I am sure that there will be considerable administrative savings as a result of this order.

Again, I welcome the order, but there are further steps that we should take to free up live music. We had some sensible proposals on how leafleting for live events and small social and cultural events is going to be treated, on which DCLG is consulting at the moment, and I welcome them. I have spoken on busking, and I promoted an amendment to the Deregulation Bill, but had somebody else speak to it. The way in which the planning law operates is still a problem for some small venues, as many people know, and there are petitions on changing the law, which I hope will make progress.

My only question for the Minister at this stage is about the guidance. Chapter 15 of the current guidance deals with regulated entertainment. Of course, it took a little bit of time to consult over exactly how the guidance needed to be changed last time around. Does the Minister consider that it will take an equivalent time this time or can the process be speeded up? I hope that it will come into effect as quickly as possible.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I, too, welcome the order. I have no particular objection to it as it stands, and I agree with many points made by the noble Lord, Lord Clement-Jones, in his current mainstream form, although I have welcomed him in surrogate packaging form on a couple of other recent occasions.

First, I want to say how nice it is that this order will come into force on 6 April 2015, which is one of the common commencement dates, and that the department has been able to find a way in which to make that happen this time. However, I do not quite follow the argument that I heard the Minister make about how the four principal objectives of public licensing come through in the specifics of some of the issues raised by this order. The one on which I want to concentrate particularly is children. I understand that crime, public safety and public nuisance issues are well dealt with because there are other ways in which they can be addressed. The choice of low-risk venues and the experience over a reasonable period with deregulated live music gives us all confidence that there are ways in which this will come through. However, I put one caveat on that, in that I worry slightly about the size of some of these venues.

In preparing for the debate that we had last week on the deregulation of community cinema, we were told by a number of expert witnesses that the size specified of 500 people was very large in proportion to existing community premises, which tend to be much smaller, and to the licensed exhibition of films. Sadly, these days there are very few cinemas; there used to be cinemas that could hold up to 2,000, particularly in London, whereas most cinemas now hold something of the order of between 300 and 500 people. So we talking about deregulating what is admittedly a low-risk environment—venues that are probably not in existence and are unlikely to be built. I wonder slightly about that, but it is not my main concern, which is that in crime, public safety and public nuisance we have reasonable experience of what has happened in the deregulatory phases of the past two years, and we understand how the regulations will apply.

Let me just take two issues. It may be a good thing to ensure that the licensing treatment for peripatetic circuses is evened up across the country. Removing regulations is a novel way of doing this—although I understand the reasoning—since it avoids the possibility of different approaches in different areas. However, circuses are aimed at children and in my experience, although I have not been to a circus for many years, most of the performances include bringing children on stage, or certainly engaging them through the clowns and various other aspects. There must a priori be an interest in ensuring that the child protection aspects of that are well considered. Will the Minister point out where that appears in the order, as I could not see it in relation to circuses? As I read the order, there is nothing specific addressing children. There is a lacuna there that we might wish to reflect on.

Secondly, there is the addition, for reasons that I do not quite understand and would like an explanation about, of Greco-Roman and freestyle wrestling. I am not a wrestling aficionado and am certainly not an expert, but I do not quite get why they have been picked out in preference to many other styles of wrestling. I do not really understand how it can be said that they are by some definition freer from concerns about public order issues than might apparently apply to Cumbrian wrestling or indeed, if we were talking about Scotland, which sadly we are not, Scottish wrestling, which is, as far as I understand it, certainly not public nuisance-free. It seems to take place in Scottish highland games, at which there are very large amounts of alcohol copiously available. Apparently for Greco-Roman and freestyle wrestling you have to be not only an aficionado but under the auspices of British Wrestling, an organisation I am not familiar with, but which is apparently the one specified. By some miraculous arrangement—perhaps the Greco-Roman gods are looking over this—there is no alcohol present because that just does not happen. That may be true, but it seems rather odd to have picked out Greco-Roman and freestyle wrestling for this, particularly as the order makes provision for this to take place in venues for up to 1,000. Not 200, not 500, but 1,000 people can gather together for an alcohol-free festival of Greco-Roman and freestyle wrestling. That is good news. Again, I worry a bit about that, but I worry also about the child protection aspects. This is an area where, presumably, young people are being brought to encourage them. It is very physical and very direct exercise—it was pretty good in the Olympic Games, and it was interesting that in the audience, there were quite a lot of children watching. My concerns are therefore obvious and I will be grateful if the Minister will respond to them.

Other than that, we think that the order is well presented. Like the noble Lord, I thought the Explanatory Memorandum was very good. I enjoyed reading it and felt it answered many of the questions I had.

Consumer Rights Bill

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Wednesday 15th October 2014 Grand Committee

[Lord Clement-Jones]

Before the noble Lord, Lord Stevenson, responds, I want to make just a couple of comments. I, of course, also will read Hansard carefully. I am somewhat disappointed because I am not sure that the voices in the debate have been heard clearly. I feel that somewhat of the straw man or Aunt Sally is being erected here as if the proponents of these amendments are trying to restrict the secondary market and prevent resale. My noble friend Lord Stoneham talked about restraint of trade. I thought that that was quite extraordinary and that we were almost in the realms of the EU or something. That is not the intention; nor is it the intention to drive people away from the event organisers to the secondary market. I do not believe that that would be the impact of what we are talking about here; that is, to get the benefit of a guarantee delivered by a secondary market in the possible event that a ticket is invalid or fraudulent. Surely, when you buy it from the event organiser, you know that it jolly well is not fraudulent or invalid. I am not really sure about that argument.

I could say many other things. As to the whole notion of the secondary market being entrepreneurial, if you know that a major sporting event is coming down the track, I do not know how entrepreneurial you have to be to reckon that a ticket for the World Cup is worth money and will be worth a great deal more money the nearer the time. I am sure that the noble Lord, Lord Borwick, is a great friend of entrepreneurs but there is entrepreneurialism and entrepreneurialism, in my view, in all of this. I think that a little bit of a splendid smokescreen is being erected around this issue. However, I take it from what my noble friend has said that there is an issue about the information given about an ordinary seller who is an ordinary consumer who has bought a ticket and wants to resell it, and the whole of their history is revealed for all to see on the secondary market. That is a perfectly valid objection and it may be a bridge too far. But there are many other aspects of these amendments which are extremely important.

My noble friend prayed in aid the regulations. The fact is that they are there but they are not adequate. I am grateful to the noble Lord, Lord Moynihan, for using the word “forensic”. If you look at the impact of these consumer regulations, you see that they are not sufficient to drive good behaviour, which is all that we are talking about in these circumstances. The main four resellers in the secondary market may well do what they can. They do not always publicise exactly what the tickets relate to. There may be merit in considering some sort of regulation where consumers do not have to pay for their tickets until the identity is known. It may be that you need a condition precedent: for example, having made the reservation, the consumer perhaps should not have to pay until the seat number can be stated. It is perfectly possible to think of a situation where that would be a valid way of behaving.

I will chew over what my noble friend has said but we have quite a bit more discussion to take place. Clearly, she recognises the strength of feeling in Committee. I think that this is a matter that we will take further during the course of the Bill.

[Lord Stevenson of Balmacara]

My Lords, I share the disappointment that the noble Lord, Lord Clement-Jones, expressed at the response to the debate. It was a very high-quality debate with some very important and influential speakers with track records and experience. It is not so much that their points were rebutted—that is what Governments do—but to have them rebutted in such an inventive way seems to me to trivialise what is an important point. We need to think very hard about what the next steps in this should be. For example, the Government do not seem to have a view on my genuine question of what a ticket is, yet they are regulating out of their ears—or that is what they say they are doing. To do so on the basis of not knowing what the central point is seems to be specious in the extreme. If they do not know what a ticket is, is it any wonder that the regulations do not do the trick?

It is absolutely clear from what has been said today and from the evidence that we have received that the current regulatory structure is a bit of a joke. It does not do what it is required to do: to make an efficient market for those who are trying to sell tickets for events they are running and for those who wish to attend them in a genuine capacity. It is not catching all the activity that is going through. The Government say that it is designed for traders, but somehow consumers are in a different category. I do not think that distinction stands up in what we are doing.

The guidance that has been issued has been tried and tested already and is clearly failing. It does not work. We need to do something about that. Under the regulations that have been in force since June 2014, I have been told by several sports bodies that no tickets that they can find on sale have the seat numbers or seller details provided. Are we to believe that no tickets at all are being sold by these traders? I do not think so.

Also, what exactly is a trader? During her response the Minister seemed to imply that there would be a case for arguing that people who bought tickets in excess of their personal demand could be treated as traders. If that is the situation, why do we not say that in regulatory form so that it is clear? It is currently up to the seller to define whether they are a trader or a consumer. In the example given by the noble Baroness, Lady Heyhoe Flint, the BA pilot who was caught selling several hundred Ashes tickets would definitely have been a trader by any definition yet was not prosecuted in that way. This is largely about consumer protection. Consumers are not going to be concerned about whether their ticket is coming from a trader or a consumer. They should have the right to know what they are buying. That is the basis of all the consumer discussions we have had on the Bill so far. It seems odd to carve this out in a different way.

I take the view that, if the Government are not going to outlaw secondary ticketing—I do not think they should—they must regulate properly for what they want: the desirable things, the things that will help the sports and help consumers. That will help to create a proper and open arrangement that is not susceptible to criminal activity of the type that we heard about from the noble Lord, Lord Moynihan, but which seemed to be rebutted by the Minister when she responded. The noble Lord, Lord Moynihan, said that there were about 1,000 people involved in criminal activity from known facts as a result of the Government’s investigations into the Olympic and Paralympic Games. What exactly is she saying if she says that some economists say that there is not any criminal activity because it was consumers who were buying the tickets? Of course it was consumers who were buying them, but if they were arriving through some form of criminal gang activity, that is not a very satisfactory situation.

As was made very clear in the debates, the amendments taken together give a range of options for the Government to look at. That is a rich opportunity for the Government to come back with something sensible at later stages in the Bill. We are not saying that there is a particular solution to this; there is a range of things that the Government could do. We are tending not to be draconian. We are not insisting on banning secondary ticketing; we are trying to say that there is a gap here in expectation. The genuine fan, the keen person who wishes to go to an activity but cannot access tickets at the beginning of the process and has to pay over the odds for them, is not well served by the information requirements. This simply is not working well. It could be changed through very minor regulatory change. It should be in the Bill because it is clear that the secondary legislation is not working. I really cannot understand why the Government are happy to be accused of standing by while consumers are being exploited.

We will undoubtedly return to this. I hope that between now and when this matter comes back on Report there may be an opportunity to have a further, more in-depth discussion with the Minister where we might get further down the line on this. In the interim, I beg leave to withdraw my amendment.

Video Recordings Act 1984 (Exempted Video Works) Regulations 2014

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Monday 28th July 2014 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, I thank my noble friend for his introduction to the regulations. Over the past 30 years, the Video Recordings Act 1984 has certainly attracted parliamentary debate on a number of occasions. As noble Lords will recall, the Act had to be revived by a special Act in 2010 because of the then Government failing to notify the European Commission of the classification and labelling requirements of the Act.

I welcome these regulations but want to reflect briefly on the process by which they came about. Many of us present today were assured during the passage of the Digital Economy Bill that the situation of exempted works which contained unsuitable material would be dealt with by amendments to the Act. Indeed, we withdrew amendments on the basis that that would happen. Then the coalition Government came in and I asked an Oral Question about progress in March 2011, but it was made clear that the consultation had still not begun. Lack of an evidence base was cited as the reason.

In June 2013, my noble friend Lord Storey pursued the matter further in an Oral Question. The consultation had, it seemed, been completed and the intention to legislate had been recently announced but my noble friend Lord Gardiner said that definitions were still being formulated for violent sexual behaviour and swearing,

“so as to ensure that they identify all products that are unsuitable for younger children”.—[Official Report, 12/06/13; col. 1596.]

Finally, four and a half years after the passing of the Digital Economy Act, these regulations, which amend the 1984 Act, see the light of day. As I say, I warmly welcome the regulations, and the fact that they will fall within the BBFC classification regime, but how can we account for this snail’s pace of legislation when faced with such an important issue? How can we learn the lessons? Moreover, where are we with the original Digital Economy Act changes to the VRA regarding video games? Is it the case that certain sections still remain to be activated and amendments made? That certainly seems to be the case. If that is so, why?

My noble friend mentioned the online situation but, of course, that is on a voluntary basis. Will my noble friend explain the corresponding regimes that apply to videos and video games on the internet? I asked my noble friend Lord Gardiner a Question on this in March this year. Surely, is it not as important that online content is addressed, as physical product is under the VRA? Under voluntary arrangements, mobile operators are offering better protection and filtering against unsuitable content than wi-fi service providers. Is the DCMS capable of addressing this issue at any speed? How long must we wait before the Government review the situation? Can we not speed up the process and learn the lessons of the past?

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a very interesting and important debate, although a relatively brief one. Many important points have been made to which I am sure the Minister will respond.

I broadly welcome the direction of travel represented by these regulations but have some questions and reservations which I am afraid are slightly at variance to those we have heard already. I worry a lot about restrictions being introduced on another creative activity even though I understand the dangers that may be exposed by that, but it is important that we bear that in mind.

First, we are exercising censorship of what may appear in front of people who wish to buy it, albeit it is obviously a restricted class, through a private company—the BBFC. I am not sure that we quite understand what the relationship between the BBFC and the Government is at the moment. It has changed a lot in the last 20 or 30 years since I was last involved in it. If the Minister has the information to hand, will he reflect on such matters as whether there is a formal memorandum between the Government and the BBFC in terms of their operations? Will the Government exercise control over the appointment of its board and other related matters? It is important to have that in context so that we understand the impact that these regulations may have. I have a general concern that the Government should not expropriate functions and responsibilities which should be exercised through Parliament to private corporations without providing serious reasons and explanations.

Of course, noble Lords will recollect that the 1984 Act was passed at a time of particular concern about videos. I think that the term “video nasty” was widely used. The regulations that were brought out were perhaps a reaction and, in some senses, account for why the BBFC is in its present form. However, times have moved on. As I will come to in a few minutes—and as referred to by other speakers—we have to be sure that what is being proposed now has a fitness and longevity that will be appropriate for the fast-changing nature of the technology which it is attempting to arrange.

I was glad to hear that the Government will be reviewing these regulations within three years. As the Minister said, that is a good thing, although a number of the points and questions raised by noble Lords already suggest that some of the issues are more important and might need more attention before then.

My first point, therefore, is about the status of the body that is being entrusted with the regulations that we are considering. My second point concerns the question of format. We are talking about video material in physical form. The impact, perversely, is largely on the purchasing decisions of people who are under 12, given that that, to a large extent, is the focus of the regulations. My personal view is that a very small number of citizens of this country who are 12 or under are going to be purchasing the videos we are talking about. I am interested to know whether the Minister has any figures relating to the likely impact on the market. If it is anything like what happens in my household, these children are much more adept at the virtual world and will be seeking out the information they wish and the material they want to watch in a non-physical form. We have talked about that issue; we still lack any real, credible strategy in relation to it. This particular set of regulations, although long promised and arriving at an interesting time, is in fact missing the boat in relation to where the majority of the viewing public are going to be—certainly those under 12.

My third point concerns the question that has been raised to some extent by the problem of the wording of the regulations, which seek in a curious way to specify the carve-out, not by putting down a simple principle about what would and would not be considered, but by listing in exhaustive detail the sort of things that would create a break across the various guidelines.

In its briefing for this meeting, the BBFC made it very clear that it was concerned that there was no blanket requirement that all video in physical form should be subject to BBFC review. It has a point and I would be interested to know on what basis the Minister has decided—I think I am right, but, again, I would be grateful if the Minister could confirm it—that the onus for submitting material to be classified will still lie with the producers of the material. Therefore it is possible that those who are producing material that perhaps is veering towards the boundary of the 12 certificate may take a view that the material does not fall within the new, enlarged carve-out. Would that constitute a defence in any court proceedings that might be brought forward as a result? The guidelines are only guidelines. The discrepancy between what the BBFC is saying and doing in practice and what is now going to be in the regulations in paragraphs (a) to (o) is going be a problem, not least because the BBFC—rightly so, although the timescale is slower than I would have liked—tries to keep in touch with the views of the public it is serving by carrying out triennial surveys and consultation with people about whether the guidelines it is currently using need to change and, if so, to what extent.

The regulations contain a set of statements, some of which, as has been said, seem to be rather loosely drafted. The noble Baroness raised the question of religion, but some of the drafting concerning sex and violence is equally culpable. Yet we will also have, by the time these regulations are in mid-flow, a new set of guidelines from the BBFC about where it thinks the boundaries of the 12 certificate are going to be. Can the Minister explain how we are going to reconcile that change?

It is perhaps not as important an issue in reducing the threshold from 18 and R18 to 12, but it is well known in the world of classification that, in Britain, we have an obsession with language, which is in stark contrast with, for example, the Nordic countries, which have a very different view of these matters. We are relatively relaxed about physical violence and a bit squeamish about explicit sexual activity, including sexual violence. It is almost the reverse situation in the Nordic countries. A lot of this will lie in education. The real remedy to this issue is making sure that parents take responsibility for what their children see and understand, and talk to them about what they do. To take examples from the list (a) to (o), how on earth are people to judge whether something includes,

“words or images intended or likely to convey a sexual message (ignoring words or images depicting any mild sexual behaviour)”—

a point picked up by the noble Baroness, Lady Howe? How are they to judge whether it affects,

“an animal that exists or has existed in real life”?

How far back do we want to go? The same goes for whether a human is being represented in proper description or in matchstick format. These can be very trivial or very difficult matters and should not take us away from the importance of making sure that children are not unreasonably exposed to images that they should not receive. On the other hand, I think that there are ways of doing it. It might have been better if the approach taken had been to try to work with what the BBFC has published as its principal guidelines without attempting to define them in a way that is bound to cause trouble.

Those were my three points, but as I said at the start of my speech, I am not against the direction of travel. I shall look forward to hearing the Minister’s response.

Copyright and Rights in Performances (Extended Collective Licensing) Regulations 2014

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Monday 21st July 2014 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, I warmly welcome my noble friend the Minister to her new role. I have known her in a number of previous incarnations and have no doubt that she will be extremely effective in her role as IP Minister. She will soon realise that these debates on copyright involve the usual suspects on most occasions.

I certainly hope that the Minister will continue the good work of her predecessor, our mutual noble friend Lord Younger, who was so assiduous in his work, variously in this House during the passage of the then ERR and IP Bills and otherwise in his briefing to colleagues and enthusiasm in building relations with rights holders and the creative industries, to the point where some of the bad taste left by the Hargreaves review has to a considerable degree been dispelled.

We had extensive debate on ECL during the passage of the Enterprise and Regulatory Reform Act. We have also, in the mean time, seen the passage of the Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014, to which my noble friend referred, relating to collecting societies.

The Government’s explanations always described ECL as “voluntary extended collective licensing”, but the fact is that ECL allows the licensing body to license rights without the prior authorisation of the rights holder. So ECL, as I emphasised during the passage of the Act, is potentially dangerous to rights holders. However, the fact remains that—as the Minister told us today, and as we were informed in very timely fashion in correspondence last week from the chief executive of the IPO, which I very much welcomed—the assurances about safeguards given during the passage of the ERR Act have been delivered in these regulations.

The suggestions that a number of us made on Report and otherwise during the passage of the ERR Act were essentially translations of the Nordic statutory provisions adapted to our own copyright regime. I am pleased to see that we have incorporated many of those as a result of the careful consultation process. These safeguards, taken together with the previous collecting society regulations, usefully include, as my noble friend outlined, matters such as the need to explain the type of licence being granted in terms of the types of works and uses in scope, and the need for the authorised body to be representative and acting with the approval of the membership. I agree that an absolute threshold for either is not practical and applaud the provision requiring informed consent. The safeguards also include the adoption of a code of conduct and the powers of the Secretary of State in relation to codes of conduct, especially where non-members are concerned; the ability to refer to the Copyright Tribunal where a claim is being made that the body is not representative or that licences go beyond the scope of existing copyright licences; the requirement to give details of opt-out arrangements and to publicise ECL schemes to non-members; a limitation on the term of initial authorisation to five years, with schemes being subject to renewal; a 28-day period, also referred to by my noble friend, in which representations can be made before the Secretary of State grants authorisation; and clear provisions about the ability to give notice of exclusion of a work. Although I would have preferred them in the primary legislation, I welcome the Government’s adoption of those safeguards in the regulations.

At Report stage on the Act, however, I raised a number of issues that are not, I think, covered by the regulations. There are a number of other issues involved as well. The first is the ability for rights owners to opt out in a manageable way. In Grand Committee my noble friend Lord Younger made a commitment that the working group on extended collective licensing would be asked to consider whether the right to opt out should be extended to exclusive licensees and their representatives. I am pleased to see that under the regulations they can indeed opt out. But as I said on Report:

“It will be unworkable to have an opt-out which is exercisable only by the copyright owner or exclusive licensee”.

Can we assume that authorised representatives can do this on behalf of rights holders?

As I also said on Report:

“In Hungary, one reason for the failure of being able to rely on the opt-out came from the requirement of Artisjus that the rights owner—not any representative—provide due diligence evidencing ownership of each title in question”.—[Official Report, 11/3/13; col. 35.]

In the context of ECL, the burden of challenging any opt-out must sit with the entity operating the scheme and not with the individual right owner. My noble friend Lord Younger said on Report that,

“the Government’s intention is that the burden of proof should favour the party seeking to opt out … It will be the responsibility of the collecting society to operate opt-out schemes which meet the needs of effective rights holders. They will need to demonstrate how they intend to do this when they apply to operate an ECL scheme”.—[Official Report, 11/3/13; col. 39.]

Will my noble friend give assurances that this has been translated into practice in the regulations? Will collecting societies be asked specifically about the burden of due diligence when authorisations are being considered by the IPO?

Secondly, as regards the possibility of an independent body to consider applications, I cannot discern in any of the regulations that any third party is tasked with evaluating the data emanating from collecting societies when authorisations are sought. This would help to prevent disputes with non-members. Will the IPO be doing this? Will it have the resources? Will it have the expertise? Is this the appropriate way to proceed?

Thirdly, since we first debated ECL we have seen the approval of the EU directive on collective rights management, which will not come into effect until 2016. I welcome EU regulation that moves us towards a common European digital economy but, specifically, how do these regulations and the directive potentially impact on each other? Does this mean that collecting societies can eventually go beyond the UK in their ECL schemes? Will they incorporate the same safeguards if they do? Should we not be incorporating the ability to choose collecting society that is contained within the directive? I certainly know that organisations such as the British Association of Picture Libraries and Agencies would be very keen to see the incorporation of that choice in these regulations and not to have to wait until 2016.

Finally, there is the question of the five-year initial authorisation. After discussion in the consultation and the Government’s response, it is clear that the initial authorisation period is five years, but what is the intention regarding subsequent periods? Do the Government envisage that the periods after that initial period will in fact be longer, which may meet some of the requirements that have already been debated?

At the end of the day, it will be necessary for collecting societies to demonstrate to member and non-member alike that they provide value for money in operating ECL. Given the emergence of the Copyright Hub and new technology, the question for the creator or right holder will be: what are the advantages of not opting out of an ECL scheme? I hope that all the time and effort expended on establishing an ECL regime proves worth while.

I remain an ECL sceptic, I am afraid to say, not least when I see the original 2012 impact assessment appended to the Explanatory Memorandum. It contains some magnificently speculative language on the prospective benefits, especially economic activity and growth in the form of unspecified,

“further value creation and cumulative innovation”.

However, there will be great swathes of creative content that will not be covered: film, television, photographs, news footage, footage on YouTube and so on. So rather like the Libraries and Archives Copyright Alliance—although perhaps for rather different reasons—which says in its briefing that it would like potentially perpetual licences, which I thoroughly oppose, I am not going to hold my breath waiting for ECL to have a dramatic impact. Far more significant to the successful and effective exploitation and licensing of copyright works is the Copyright Hub and its successful rollout.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I join others in welcoming the Minister to her first outing. I have rarely seen a smoother and more effective transition from Back-Bencher to Front-Bencher. She seemed to take to it as though she had been doing it all her life—indeed, so much so that the government Chief Whip, who crept in at the start of the Minister’s remarks, presumably just to make sure that she had made the right decision, left almost immediately, smirking widely. The Minister seems to have passed whatever test that was, and I congratulate her.

I also play tribute to the noble Baroness’s predecessor, the noble Viscount, Lord Younger, who, as has already been said, has been very good on this issue: patient, courteous—yes, all that—but also a fantastically good letter writer. I hope that the Minister might pick up from him his ability to find one or two issues that came up during these debates and discussions which required him to write us letters which served as a good way of catching up on what had been talked about and picking up on the points that occasionally get missed. That is not mandatory, but it was something that we all welcomed and enjoyed.

As others have done, I also thank officials for their work on this SI. It is the first time that I have ever had a briefing from no less than the chief executive of the IPO—which made me tremble slightly as I opened it up and realised what it was. It was good to have. Maybe it is not a change of view, but one of the concerns that we have had over the plethora of activity that has come out of the Hargreaves review has been a slightly defensive attitude on the IPO’s part, which I felt was manifested in meetings and correspondence. If this is the new IPO under the new Minister, she has effected change in a remarkably short time. It very welcome and long may it continue.

The Minister will already have realised that she is entering an area of deep expertise from a very small number of people in your Lordships’ House. There are usually one or two more of us than there are today—we are feeling a bit bereft of other noble Lords and Baronesses. However, we geeks like nothing better than to get our teeth into a bit of IP and feel that a day in Parliament is wasted if we have not had some meaty issue to chew over. I am delighted that we are back on track and look forward to more of these debates.

This instrument has a long pedigree, as has already been mentioned. We have been talking about the passage of the ERR Act of famous memory, during which some of the debates around the Government’s approach were rehearsed over a long period of time. Out of that has come some good, however, because I am sure that the thoughts that informed those debates have been reflected in some of the outturns that we have seen today. As the noble Lord, Lord Clement-Jones, was right to point out, this area is not free of others who might wish to make regulations. We have a European directive on this and a number of similar areas that is still to come through within a couple of years. There is also the ongoing work of the non-statutory but important Copyright Hub, which will in time prove very capable of dealing with so many of the issues that we have been looking at.

In looking at collecting societies, we should have at the front of our minds the fact that this is a process of dealing with a regulated monopoly. As such, it is important that Parliament should exercise as much scrutiny as possible in these areas. We are broadly disposed not to accept monopolies, even though they often occur and exist in many parts of the economy. However, in this area we are permitting them to exist and, indeed, encouraging them to take their work further. It is therefore important that we spend time on thinking through the implications, certainly those raised by the noble Lord, Lord Clement-Jones, and my noble friend Lord Howarth.

Intellectual Property Bill [HL]

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Wednesday 2nd April 2014 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for his introduction to this group of amendments and, indeed, for his oral and written briefings while the Bill was going through the Commons. It was most helpful to have a blow-by-blow account of the amendments as they were put forward by the Government.

I do not want to appear churlish, and I will not be pressing the matter to a vote, but the amendments cause some considerable concern. The inclusion of the phrase,

“features that differ only in immaterial details from that design”,

as inserted by Amendments 5, 7 and others, give me particular cause for concern. I and organisations such as ACID, which represents smaller designers, are concerned that this change drastically narrows the offence to such an extent that it will apply only to the production of counterfeits. Given wider consultation, a much better form of words would have been achieved—something on the lines of “to make a product exactly to that design or to a design which does not produce on the informed user a different overall impression”. In the circumstances, that would have been far preferable.

The provision will put in place a deterrent to protect registered designs against absolutely slavish copying, but the new wording, as it stands, will allow someone to make sufficient small changes which are not “material” changes to avoid the offence. The intent to copy is still there whether they are immaterial or material changes, and I have grave doubts about whether the newly amended provision will be effective in protecting designers, particularly small designers.

At this point, I want to quote from the noble Viscount’s letter of 5 March, which was very heavily directed towards explaining why these amendments had been adopted in the way that he has described. However, it goes into rather greater detail. In his last paragraph dealing with Clause 13, he says:

“Some have inferred that because the term ‘substantial’ is used in copyright legislation, and therefore in the context of criminal sanctions for copyright offences, that this provides a suitable precedent for using it in registered design sanction”.

Truer words were never spake. That is exactly the case that many of us have been making. However, I do not believe that the remainder of that paragraph holds water in the context of copyright law and the ability to enforce it in relation to substantial copying in these circumstances. The term works for the criminal offence in copyright and I see no reason why it should not also work for registered design criminal liability.

I also regret that unregistered designs have not been given greater protection under the Bill. BIS figures, which were very recently welcomed by the Minister, demonstrate that UK investment in intangible assets now totals some £137.5 billion. Of that, some 46% is protected by copyright, 21% by unregistered design rights and 21% by trademarks. That demonstrates why throughout the passage of the Bill I have supported the case for extending criminal sanctions for registered design infringement to unregistered designs. Those are vital matters of national investment. If anything, the addition of the word “intentionally” by the Government in the Commons, as reflected in Amendments 4, 6 and others, has strengthened the case for that protection under the criminal law.

I believe that the amendments relating to intentionality introduce unnecessary additional mens rea to the offence. It is a belt-and-braces approach to what I believe was already there. However, I do not see how, given its inclusion, the Government can still refuse to extend criminal penalties to unregistered designs. If someone has “intentionally”—that is, deliberately—set out to copy someone else’s work for their own commercial gain, it should not matter whether that work is protected by a registered design right or an unregistered design right. It has still been deliberately stolen. I repeat that these rights are extremely important for our national investment. I still live in hope that sense will prevail at some stage in the future and that our designers will be properly protected by the criminal law, as are trademark and copyright owners.

The one bit of good news for designers is the European Court of Justice Advocate-General’s decision today on the Karen Millen v Dunnes case. As we know, the majority of the UK’s designers rely on unregistered rights, so this has provided clarity and will strengthen the unregistered design right in that it is the totality of the design one holds which the law protects, not by eliminating individual parts of a design. There is some good news coming out of the ECJ but not out of the House today.

[Lord Stevenson of Balmacara]

My Lords, in Committee, we opposed the criminalisation of the unauthorised copying of a registered design and the dealing with unauthorised copies. We also opposed any possibility that that might be extended to unregistered designs. To that extent, I disagree with the noble Lord, Lord Clement-Jones, who has just spoken at length and with passion about these issues, as he has throughout the passage of the Bill. I understand where he is coming from but we simply do not agree on this point.

On Report, although we lost in Committee in terms of these discussions, we decided that the best thing to do was to come back with a series of amendments which would try to moderate where the Government were trying to get to. When I introduced the first of these, I quoted the noted British designer, Sir James Dyson, who had written to many noble Lords on that occasion. He said:

“In the law relating to copyright, acts of unintentional infringement are excluded from criminal sanctions. In the proposed clause of the Intellectual Property Bill relating to registered design … the same is not true. If this Bill is passed unamended, innocent designers will be threatened with criminal proceedings. It is wholly wrong that a designer should go to prison for unintentional infringement. The current wording of the Bill does not exclude that possibility”.

He continued:

“I have spent decades fighting to protect my ideas; taking on competitors who have flagrantly copied my patents and designs. I abhor intellectual property infringement. It is something I feel passionately about. But the Intellectual Property Bill’s inclusion of proposals to criminalise infringement of registered designs is a serious mistake”.

Our argument on this issue is, in essence, that the legislation would open a Pandora’s box of unintended consequences, potentially discouraging the very kind of legitimate, competitive risk-taking that policymakers have been very keen to encourage as a driver of growth. In particular, I said that this could be a deterrent to inward investment in UK design, which may not only result in an innovation drought but threaten the future employability of UK designers. I thought then, and I still believe, that the Government had failed to make their case.

However, notwithstanding the reservations, we also argued that if criminal sanctions were to be introduced we wanted to raise the bar to criminal proceedings by making it clear that they would be commenced only if it was clear beyond reasonable doubt that the action taken had been persistent, calculated and motivated by evidence of an intention to exploit the original registered design.

In that debate, the Minister said he would give serious consideration to the concerns that we expressed, and he brought forward an amendment at Third Reading which would introduce a defence of reasonable belief that the design in question was not infringed. While we were happy to sign up to that amendment, which raised the bar as we wished, we said that it did not go far enough.

We are therefore very pleased that with these new Commons amendments the Government have returned to what is in effect the original IPO consultation document, which for example promised that the criminal offence would contain defences,

“against unintentional infringement of registered design rights”.

We are therefore pleased to agree with the new amendments to Clause 13, which specify intentionality—that the act of copying must be a considered act—and define how close to the original the copied design would need to be by reference to terms currently used in the relevant legislation. We continue to oppose the introduction of criminal sanctions for registered design infringement as a matter of principle. However, we will support the changes to the Bill.

Gambling (Licensing and Advertising) Bill

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Tuesday 14th January 2014 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, the case that has been made is very powerful. We need consumer measures to make a reality of some of the aspirations in this Bill, and it is wrong for government to will the ends of policy without also willing the means.

If the Government’s intention is to rely on a prosecutorial approach to this, they are bound to be frustrated. We are talking about a black market emerging which will be located offshore—very much offshore in some cases—in territories that will not recognise British prosecutorial intentions and in which the possibility of bringing people to justice will be very remote indeed. What will provide the stick to ensure that these measures are effective and to root out those who would operate in a way that is counterproductive to UK interests?

The two suggestions in our amendments, which shadow closely those put down by the noble Baroness, Lady Howe, reflect the two possibilities that are realistic. They are to try to find a financial way of squeezing out those who are operating out there—if they cannot make money out of it, they certainly will not continue; it is also possible to think in terms of IP.

There is a sense in which the fact that these powers exist will probably be more effective than the use of them. I say this in full understanding of the wider context—that shutting down people’s access to operating in an open economy is generally a bad thing—but there will be cases where it is necessary to do that, and we would support that if it were required.

These proposals have wide agreement. There is obviously going to be a considerable issue here, which needs to be addressed by the Government. It is up to the Government, via the Minister, to respond to the powerful case made by the noble Baroness, Lady Howe.

[Lord Clement-Jones]

My Lords, a strong case has been made by the noble Baroness, Lady Howe. It is rather nice to see the rebirth of Section 17 of the Digital Economy Act, which I had the honour of being instrumental in inserting into that Act during its passage through this House. As a result, I was nominated as the “internet villain of the year”.

As it happens, I need to correct the noble Lord, Lord Lipsey: it is not that particular section that is used in order to block ISPs where copyright infringement is being demonstrated; it is actually Section 97A of the Copyright, Designs and Patents Act, which has proved extremely effective. In a way, it demonstrates that you do not need such a complicated clause. That is neither here nor there, but it does show that site-blocking is perfectly effective. Indeed, as the noble Lord, Lord Lipsey, demonstrated, the BPI has been very successful in defending copyright owners in that respect, contrary to the views of Ofcom, which were expressed in 2010 and are the reason why Section 17 of the Digital Economy Act has not been brought into effect.

When I read the evidence of the Gambling Commission to the DCMS Select Committee, I really do not know what kind of universe it is living in. Its conclusions seem rather extraordinary. It is worth reading out the paragraph that deals with its rationale for why it did not recommend to the Government the introduction of site-blocking or financial measures of the kind the amendments in the name of the noble Baroness, Lady Howe, deal with. It says:

“We have also followed carefully the experience of gambling regulators in other parts of the world with site and payment blocking, which suggests in the gambling market such measures have achieved only limited disruption and deterrent effects”.

Actually, a lot of jurisdictions have adopted those, as we have heard today. The commission goes on to say:

“However this may be because they were tried primarily in markets where the legal offering was severely constrained and the tax rates high”.

I am not sure about that. It continues:

“In the case of UK gambling there is no equivalent to the copyright owners to seek injunctions nor any statutory power for the Commission at the moment to seek such injunctions. We came to the conclusion that, given all the other measures at our disposal and the very open and attractive legal opportunities for those licensed by the Commission, seeking additional powers in the Bill to enable the Commission to seek injunctions blocking illegal operators’ sites or use of payment processors would not be proportionate to the likely risks and would, if obtained, risk consuming disproportionate Commission resources to achieve limited disruption and deterrent effect”.

That argument seems to me to be saying, “The carrots are absolutely fantastic and that will mean that there will not be too much of an illegal market”. There are going to be illegal markets; there are going to be unlicensed operators; and the commission is more or less saying that the only stick of some kind at its disposal, and we have heard about the flaws in that, are on the advertising front.

The commission did say, however, that,

“we did not rule out the option of seeking such powers at a later date if our assessment of the small size of the illegal market proved wrong and of course there are continuing discussions on the wider government front and in the European Commission in relation to combating misuse of the internet and illegal remote gambling provision”.

It is very odd for a regulator of this kind not to be looking at the precautionary aspects of all this. At the very least, taking reserve powers for site blocking in these circumstances would make great sense. I hope that, even if the Government cannot bring themselves to say that they will introduce and implement this kind of measure, they will at least take a reasonably pessimistic view that a number of unlicensed operators will still be knocking around who need a considerable amount of stick to make them comply with the new regime after the passing of this Act.

Intellectual Property Bill [HL]

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Tuesday 30th July 2013 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, the arguments for and against criminal sanctions for designs have been extensively aired over our discussions on this Bill. Proponents feel that current civil enforcement is expensive for small innovators and that current civil sanctions are not dissuasive to large infringers. Opponents are concerned that unexamined IP rights are a dangerous basis for taking criminal sanctions and that there is a risk of stifling competition in useful products.

We understand the Government’s aim in this Bill. As the Minister said, we were anxious to see if we could move towards a common position. However, we are still concerned about whether it is appropriate and proportionate, whether it would really deter those pirates and counterfeiters whose behaviour the public would consider criminal and whether it may turn out to have a stifling effect on innovation and competition.

One concern, which we have expressed previously, is that the proposed provision could turn into a tool to be used by unscrupulous companies to the detriment of UK designers. It is reasonably inexpensive to register a design, especially as there is no effective examination involved. An unscrupulous company could apply to register designs it copied from a UK designer, then threaten that designer with criminal sanctions for producing his or her own designs. The prospect of defending a criminal action might be enough to make the designer give in. What sort of fairness does that speak to?

As the Minister says, the Government’s intention is that blatant, deliberate copying of designs for commercial gain, safe in the knowledge that many of the victims will be unlikely to have the resources to respond, is an act worthy of punishment, and they believe that the UK needs a coherent approach to the protection of intellectual property rights. On the other hand, the measure is opposed by the IP Federation, the Intellectual Property Bar Association, the City of London Law Society, the Chartered Institute of Patent Attorneys and a number of IP lawyers and specialists. I put it to the Minister that it may not turn out to be a brilliant career move for the IP Minister to cross swords, as he has done, with Sir James Dyson and, indeed, the Ministry of Defence on this point.

As Roger Burt, president of the Chartered Institute of Patent Attorneys, says,

“the Intellectual Property Bill could result in people being charged with criminal offences and locked up for up to 10 years, just for producing a design that looks ‘substantially’ like an existing design”.

We tried to find a compromise position with the Government on this point. We wanted the Government to raise the bar for criminality so that criminal penalties could be considered only in cases, using the words used by the Minister, of “blatant, deliberate copying of designs, for commercial gain”, but we failed. However, we are glad that the Minister listened to one part of our argument, which is that the legislation as drafted might open a Pandora’s box of unintended consequences, potentially discouraging the very kind of legitimate, competitive risk-taking that policy makers have been keen to encourage as a driver of growth.

We therefore welcome the government amendments tabled today, which propose a defence for anyone who reasonably or in good faith believes that their actions were non-infringing. We will continue to oppose the introduction of criminal sanctions for registered design infringement as a matter of principle. However, we are pleased that there will now at least be a defence for any person who reasonably believes that they are not infringing. The objective test of reasonableness should cover situations such as where someone has taken legal advice on the issue, or where an opinion of non-infringement is secured from the IPO opinion service.

They should also extend more broadly to cover competent self-analysis and explanation by a defendant as to why he or she believed that an informed user would perceive the product as creating a different overall impression to the registered design. This is an important amendment and we are happy to support it.

[Lord Clement-Jones]

My Lords, as the Minister knows, I have always been a supporter Clause 13. I know that many small designers will be delighted to see it contained in the Bill and I hope that it survives its passage through the Commons.

Although I did not feel that the clause needed a huge amount of amendment or that it will be the blunt instrument that some people have predicted, if the addition of the amendment makes it more acceptable, it must be welcomed. I welcome the fine tuning that the Minister has carried out.

In welcoming the amendment, and given the restrictions on speeches at Third Reading, I want to thank the Minister for the accessible and receptive approach that he has taken throughout the Bill. I hope that as the Bill goes through the Commons the further discussions that he has promised on lookalikes—and, in particular, on the comparative advertising issues which may be applicable to lookalikes—and on the kind of penalties that might be appropriate to digital copyright infringement will bear fruit.

Intellectual Property Bill [HL]

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Tuesday 23rd July 2013 Lords Chamber

[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.

Intellectual Property Bill [HL]

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Tuesday 18th June 2013 Grand Committee

[Lord Clement-Jones]

My Lords, I am afraid I have three amendments in a row. I do not know whether it will be “three strikes and you’re out”, but Amendment 30 is the second. I will first explain that Section 73 of the Copyright, Designs and Patents Act is a provision in UK copyright law that permits the immediate retransmission of the main PSB free-to-air services by “cable” in the area where the original PSB channel was broadcast. Crucially, Section 73 provides that the copyright in the broadcast, and in any work included in the broadcast, is not infringed by such retransmission. The effect of the section is to permit “cable” operators to retransmit PSB services without agreement or consent.

What was the original purpose of the provision? The policy justification for Section 73 in its current form was to encourage cable rollout in the 1980s and 1990s as a competing platform to terrestrial television. How have the courts interpreted the provision today? In the recent TVCatchup litigation in the UK and CJEU, TVCatchup, an online TV service provider, argued that its retransmission and commercial exploitation of the PSB services via the internet was lawful under Section 73 on the basis that “cable” ought to be given its natural meaning. The judge in the High Court litigation agreed, and stated:

“I see no reason why the cabling system inherent in the internet should not be regarded as ‘cable’ for the purposes of the Section 73 defence”.

This is not an interpretation that can ever have been intended by Parliament—nor, based on correspondence with the IPO, is it one that the Government believe is correct. In that correspondence in 2008-09 the IPO stated that,

“‘cable’ in section 73 as amended must mean the same thing as ‘cable’ in the Information Society Directive, the relevant requirements of which were implemented by the section 73 amendments in question. In the Information Society Directive ‘cable’ is not synonymous with ‘wire’ and is confined (as therefore, is section 73 CDPA) to the retransmission of broadcasts by conventional cable programme providers. The foregoing supports this Office’s view that the activities of IPTV providers such as ‘Zattoo’ who purport to rely on section 73, are in fact wholly outside the scope of that provision and that there are grounds for challenging them on that basis”.

The IPO also stated in the correspondence that the interpretation of Section 73 by the IPTV providers, and confirmed by the UK courts in the TVCatchup case,

“cannot have been Parliament’s intention”.

What are the problems with Section 73 now, in the light of that case? First, economic loss for PSBs and the UK creative economy. Section 73 is now being relied on by a series of service providers, most notably TVCatchup and FilmOn, to make money from PSB channels by retransmitting them via their own online services and placing advertising in and around the channels, which include BBC channels. Not only are the PSB services being exploited without agreement or payment to anyone, including contributors, but, perversely, Section 73 effectively permits these illegitimate online services to stream a small amount of content on the PSB channels, such as a number of old series for which online rights were not obtained and some sports coverage, that the PSB services themselves cannot stream online for rights reasons. This perverse consequence of Section 73 has attracted significant attention from underlying rights holders, including UK producers and foreign providers such as US studios, as well as from other industry bodies.

Services such as TVCatchup undermine the legitimate online streaming services and on-demand catch-up services provided by PSBs which, in the case of commercial PSBs, are a core part of ongoing efforts to make a financial return on the PSB investment in original UK content.

It is increasingly clear that TVCatchup in particular is operating at scale in the UK and has many millions of users. Indeed, it claims that it has close to 12 million registered users on its site. The key losses from this exploitation for the PSBs are loss of audience from legitimate PSB online streaming services, linear broadcast viewing and on-demand services, and, for the commercial PSBs, loss of advertising and sponsorship revenue from their own channels. By contrast with PSB exploitation of channels and content online, none of the TVCatchup revenue flows back into original UK content production or to underlying talent and rights holders. The scale and problem of this free riding is likely to increase substantially over the coming years as more and more households adopt connected TV—that is, IPTV.

Secondly, the original policy rationale for Section 73 has gone. Significant cable roll-out is now a thing of the past and the TV distribution market is now highly competitive. Cable is a highly effective and well resourced competitor to Sky and Freeview/digital terrestrial television. There is no reason to continue to grant a primary legislative advantage from the 1980s to one particular platform operator in the current competitive market. Moreover, the Communications Act 2003 introduced a “must offer” obligation on the PSBs under Section 272, requiring broadcasters to offer the main PSB services for carriage on the cable, as well as satellite, platform. In addition, Virgin Media contracts with the PSBs for the supply of all the other channels offered by the PSBs that are not covered by Section 73.

Thirdly, the provision is almost certainly in breach of European law and exposes the UK Government to damages actions. In its submissions to the CJEU on the TVCatchup case, the European Commission made clear that it had grave doubts about the compatibility of Section 73 with the 2001 copyright directive. I will not go into the detail of that. The Commission went on to observe that it was “very doubtful” that the UK court’s ruling that TVCatchup could make use of Section 73 for that part of its service transmitted over the internet “could stand”. Notwithstanding the Commission’s clear position, however, the CJEU could not deal with the compatibility of Section 73 in its judgment in the TVCatchup case because the UK court had declined the request of the broadcasters to refer the question of the compatibility of Section 73 to the CJEU in the first place. What should the Government do in the face of this?

In broadcasters’ meetings with the Government to date it has been very hard to understand the remaining policy rationale for Section 73, particularly given the “must offer” obligation that applies to the PSB channels. Broadcasters believe that repeal of Section 73 would be a sensible deregulatory measure that would end the unjustifiable damage which is being suffered by the PSBs, and would ensure that the UK continues to meet its Community law obligations. They believe that the forthcoming legislative programme, including this Bill, provides the Government with an opportunity urgently to consider repealing Section 73, assuming this cannot be achieved by secondary legislation following the passage of the Enterprise and Regulatory Reform Act. Repeal of Section 73 would not only assist broadcasters in their fight against parasitic websites—we have used that term earlier today—but would also ensure that UK legislation complies with the EU acquis and therefore reduces the risk of any potential infringement proceedings against the UK.

The negative commercial impact of retaining Section 73 is significant for UK public service broadcasters, and ultimately, as a result, the producers of the audio-visual content they broadcast. This impact will continue to increase if no action is taken by the Government to repeal these provisions. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I declare no current interest in this matter, although I was director of the British Film Institute when the Copyright, Designs and Patents Act was enacted. I was also author of a minor monograph that is still in print.

The amendment troubles me. Section 73 of that Act is only one component of a complex web of regulation that provides equilibrium in the UK broadcast market. It ensures that consumers who have already paid for PSB content through the licence fee or indirect taxation can get access to publicly funded content through a cable platform at no additional cost. It is true that Section 73 is a relatively old provision created when the cable industry was in its infancy. It is also true that the cable industry is in a different position than when Section 73 was conceived. However, the age of something should not determine value. Attempts to delete old things from existence can surely give no Member of your Lordships’ House much comfort.

However, the amendment gives the Government a chance to look again at the objective of Section 73 and to ask themselves whether the outcomes it delivers today are still relevant to their public policy objectives. I acknowledge that the recent TVCatchup case referred to by the noble Lord, Lord Clement-Jones, raises legitimate concerns about the use of Section 73 as a defence for the retransmission of free-to-air PSB channels online.

I understand that the Government are currently looking at how Section 73 might be amended and tightened to ensure that the beneficiaries of the clause are the intended platforms that are acting within the law. Perhaps when he responds the Minister will again put on his DCMS hat and let us know what progress is being made in that review, and indeed what progress is being made on the communications White Paper—another of the vanishing opportunities for the Government to intervene in these areas, which has been promised since 2010. It seems that we are no nearer to a publication date.

However, apart from the TVCatchup issue, I understand that Section 73 continues to provide PSBs and consumers with the most efficient route to access the PSB channels that most cable subscribers want and who equally do not want to have to pay twice for. Some noble Lords may be aware of the ongoing row between the PSB community and the Sky platform about the level of fees paid to broadcast on the commercial satellite platform. Indeed, one of the major gripes that PSBs have at the moment—and I understand that they been lobbying for this through the communications review process—is that they want to see an end to fees that they have to pay to platform providers to carry their content.

However, when setting out the Government position in his speech to the Oxford Media Convention in January 2013, the Culture Minister said:

“I welcome the steps Sky have taken so far to reduce retransmission fees to a much lower level. But we want them to go further, taking into account the undoubted value that PSBs offer to satellite platforms and their viewers, so that there’s a level playing field: zero fees either way”.

This would, indeed be a good outcome for consumers. However, the question remains of how to draft a clause to ensure that there is a level playing field between all platforms, with zero fees either way.

Unlike publicly funded platforms and unlike BSkyB, cable has never charged PSB channels to carry their content. Given that this zero charge/zero pay policy is the policy outcome required by the Government, and we understand that this issue will be considered in some detail by the Government when their communications White Paper is eventually published in the summer, the amendment seems somewhat previous, as well as contrary to consumer interests.

While the recent TVCatchup case may indeed require an adjustment to the current law, abolishing the clause entirely, as the noble Lord, Lord Clement-Jones proposes, seems entirely contrary to the interests of 4 million cable customers who access public service content, at no cost to those broadcasters, through the cable platforms. I hope that the Government will firmly resist the amendment.

Intellectual Property Bill [HL]

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Thursday 13th June 2013 Grand Committee

[Lord Clement-Jones]

My Lords, in moving Amendment 23, I shall speak also to Amendment 24. Amendment 23 is very straightforward. Really, it is a question for the Minister: as regards the new criminal penalties that apply to registered design rights, why has Section 110 of the Copyright, Designs and Patents Act, “Offence by body corporate: liability of officers”, which ensures that company officers are liable if conniving or consenting, not been replicated here for registered designs? I could read out the relevant offence under the CDPA but I am sure my noble friend is familiar with it. However, it seems odd that everything else replicates what is contained in the CDPA for copyright but not the application concerning the liability of company officers. Considering that so much business is conducted through companies, it seems extraordinary that that provision is not included in the Bill.

I see that there will now be a clause stand part debate. I am not surprised because this is clearly a subject that needs airing. Rather more controversially, Amendment 24 is an attempt to advocate the extension of criminal offences for infringement of unregistered designs. As we know, Clause 13 introduces a new criminal offence of deliberate infringement of a registered design right. While this is a welcome move, to be of any benefit to the vast majority of designers in this country, the Bill needs amending so that criminal sanctions also apply to the deliberate infringement of unregistered designs.

Design is of key importance to the UK economy. There are around 350,000 designers in the UK and UK businesses spend around £35.5 billion on design each year. The majority of the UK’s design community are lone, micro and SMEs, with 87% having fewer than 10 employees and 60% having fewer than four. Approximately 4,000 designs are registered annually in the UK and approximately 5,000 are registered in the EU. However, the great majority of designers rely on unregistered rights.

Each year, between 18,000 and 25,000 unregistered designs are lodged with ACID—which represents designers and was mentioned at Second Reading and in these proceedings—by its some 1,100 members. ACID’s design data bank does not add to any intellectual property rights but provides evidence of the date on which it received a design. It encourages designers to keep an IP audit trail from the seed of an idea to market reality, which provides essential evidence if designs are copied. Extrapolating from that figure of 1,100, it is therefore reasonable to assume that the majority of the UK’s designers rely on unregistered design rights, and on copyright of course.

Why, then, is the new criminal offence limited to infringement of only registered designs? Surely criminal sanctions need to apply to unregistered design rights as they apply to copyright, in order to have any real and lasting benefit for UK designers. The introduction of criminal sanctions for deliberate infringement of registered designs is a progressive step. This is the first time that criminal sanctions have mirrored copyright. While I accept that registration offers designers a longer-term and stronger right, unlike trade marks and patents, there is no extensive examination for registration, so design registration is a very different type of protection.

To register a design costs £60 per design. Regrettably for most lone and micro designers, the cost of registering every iteration of a design would be prohibitive. ACID receives between 18,000 and 25,000 designs annually, so it is clear that informed designers take their design audit trail seriously. However, to ask them to pay £60 would be a real barrier. The majority of ACID settlements have been based on unregistered design rights and the ability to provide a design audit trail held on the ACID design data bank. In its 2010 survey, 89.7% believed that design infringement was deliberate and blatant. In a further survey in 2012, 97% believed design infringement was deliberate and blatant. Given the cost, time and scale of opponents in the majority of these cases, deterrence against copying is critical. Extension of criminal sanctions to unregistered design rights for the majority of the UK designers would be a deterrent to persistent copying in much the same way as it is for copyright and trade mark infringement.

Criminal sanctions have been available for copyright infringement since 1862 and for trade mark infringement since 1994. Criminal prosecutions have been used sparingly, sensibly and appropriately. Copyright is a property right. A trade mark and an unregistered design right are property rights, as is registered design. Whereas persistent copying of the first two constitutes a serious criminal offence, punishable by up to 10 years’ imprisonment, which exceeds the longest sentence for ordinary theft, currently persistently copying designs is not a criminal offence at all. This is completely anomalous. Persistently copying a 2D drawing of a design or a design document can give rise to criminal liability under Section 107 of the CDPA, but when this 2D work is converted into a 3D design, unless it is protected as a work of artistic craftsmanship, which we have previously discussed, copying that 3D version would not be a criminal offence.

I fail to understand the policy decision behind this. Nearly all designs are copied from the 3D original, not the 2D drawing. How do the Government justify giving a higher level of protection to a 2D design brought than they to the 3D manifestation of that design? A telling point was made by designers when they gave an example of the scale of opponent in the three latest cases involving members of ACID. This demonstrates the inequality of arms between infringers and designers. For instance, one ACID member had a turnover of £50,000 and two employees, and its opponent in this infringement case a turnover of £8.7 billion and 78,000 employees. How on earth can a lone designer gain justice in those circumstances?

In a second case, an ACID member with a turnover of £500,000 and 15 employees was opposed by a major retailer with a turnover of £20.5 billion and 145,000 employees. I will not try the Minister’s patience much further—these are difficult cases, where members are seriously prejudiced—but in a third case, an ACID member with a turnover of £250,000 and 10 employees was opposed by, again, a major retailer with £3.4 billion turnover and 52,000 employees.

If anything, in these circumstances, there are quite honestly stronger reasons for imposing criminal offences for unregistered design right infringement than there are for infringing a registered design. I hope that the Minister can elucidate why this is not being done and perhaps give us some assurance that this is under consideration. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I am very grateful to the noble Lord, Lord Clement-Jones, for his lucid introduction of these two amendments. As he says, the first seems to deal with an error. We shall wait to see what the Minister says about it, but we would support it if he chose to take it further.

Amendment 24 picks up the debate where we left it on Tuesday. For most of the time we reflected on why the Government have adopted a two-track approach, although unfortunately in this case the tracks lead in opposite directions. In one there is no attempt to simplify the design rights field. The points made by Ian Hargreaves in his report, and picked up by many commentators, seem to have been ignored. I know that it is difficult to eliminate unregistered design rights; nevertheless the fact that we have five different ways of classifying or approaching these designs is still an irritant and source of confusion for the industry. It cannot be effective in terms of building up the creative industries more generally. It is something that will have to be addressed at some point, if it is not dealt with in this Bill.

The second track is this: why should one penalise on the registered design side but not on the unregistered design side? We will be opposing the question that Clause 13 should stand part in the next group, so my position on this is somewhat complex because I would not want to see criminal penalties brought into this area at all. That is not the right direction of travel and I will expand on that when I speak in the clause stand part debate. Parking that for a moment, I accept absolutely the points made by the noble Lord, Lord Clement-Jones. There is no substantive difference in how unregistered and registered designs are treated. The fact that they are registered does not in any sense imply approval or otherwise of them, or give them any status that is different from unregistered ones. The figures are exactly what they are. Most of the people who operate in these fast-moving areas, particularly fashion, tend to use unregistered designs, and those who do so have no real protection when there is a problem.

I was particularly struck by the points made by the noble Lord, Lord Clement-Jones, about the way in which the design copying process might happen. Most people would take the 3D representation of a design, not the 2D design. As he pointed out, the discrepancy in how such malfeasance is then approached by the courts is obviously a stark example of how the process is not working.

The noble Lord’s final point about parity of arms is one that we will return to. It is clear that there is a real danger in the creative industries these days that those with the resources can use the system to obtain advantage in the knowledge that people will not be able to defend their designs. Yet we rely on these individuals and small companies to provide the design initiative that is necessary to grow our creative industries. For all these reasons, I support the noble Lord in his amendments.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, that was a very interesting debate and prefigured what I am about to say about the question of criminality in this area. The noble Lord, Lord Clement-Jones, has made the arguments and is correct about them, and it is up to the Minister to make the best of if. If the industry is voting with its feet and adopting the unregistered design right as its mode of operation, and if it is true that there is a sense that having criminalisation in this area will improve the quality and quantity of our economic activity in it, it must follow logically that criminal sanctions should apply. However, I shall devote the next few minutes to arguing against exactly that proposition, but then, this is Committee.

Clause 13 introduces a new section into the Registered Designs Act, creating a criminal offence of unauthorised copying of design in course of business. It would apply in respect of UK-registered designs and registered Community designs. As I have said, we are concerned about the fact that this is being introduced as a criminal sanction.

There are two categories of offence, and I shall refer to that as I carry on with my remarks. One is about the making of a product by copying a registered design,

“so as to make a product exactly or substantially to that design”,

and the second offence is dealing in products that have been copied. Both will carry sentences of up to 10 years, which, as the noble Lord, Lord Clement-Jones, mentioned, is very high on the list of tariffs. The arguments for and against criminal sanctions for designs have been extensively aired over recent years, and we should bear in mind that levels of piracy have risen.

To recap briefly, proponents of this move feel that the current civil enforcement is expensive for small innovators and that current civil sanctions are not dissuasive enough for large infringers. Opponents are concerned that unexamined IP rights are a dangerous basis for taking criminal sanctions and that there is a risk of stifling competition in useful products.

We understand the Government’s aim—I have just referred to it—but we worry about whether the proposal for criminal offences in general is the right tool for the job and, in particular, whether it is appropriate and proportionate and would deter those pirates and counterfeiters whose behaviour the public would, I accept, consider to be criminal. There is rather an important discrepancy here. Those who champion criminal sanctions are largely talking about unregistered design rights, which we have been talking about, and, of course, the huge preponderance of design rights are in that category, but the Bill is about only registered design rights and registered Community designs.

Registered design rights are better defined and have a much longer lifetime but, as we discovered, they are not in any sense better examined, so the proposed introduction of criminal sanctions may not work, and I would like to bring some particular problems to the attention of the Committee. The penumbra around a design, which is to be found in the uncertainties about how “exactly or substantially” is defined, makes it unclear what is or is not a criminal act. Unlike parallel trade mark or copyright offences, mere use, whatever that is, of an infringing product, even if no copying is involved, will become a criminal offence. Furthermore, the maximum sentence is very high for what, in fact, could be just a mere business misjudgment without deceptive intent.

The Bill introduces a defence as it states:

“It is also a defence for a person charged with an offence under this section to show that the person did not infringe the right in the design”.

However, the inclusion of the new section contributes to the bizarrely complex nature of the offence. For example, if the prosecution shows that D copies the design, and produces something exactly or substantially to that design, D can attempt to show that the product would not produce, for an informed user, the same overall impression as the registered design. These distinctions are hard for specialist lawyers to comprehend, let alone lay people such as jurors or magistrates. I will return to this point in relation to a recent case. Implied in what I have just said, of course, is the major concern that the courts that will deal with these cases will be criminal courts, which have no real experience at all in design law.

The defence that the registered design was not in fact copied raises difficult questions, as many of the cases on copyright infringements have shown. As already mentioned, there is a concern that the proposed provision could turn into a tool to be used by unscrupulous companies, to the detriment of UK designers. It is reasonably inexpensive to register a design, especially as there is no effective examination, and an unscrupulous company could apply to register designs it copied from a UK designer and then threaten that designer with criminal sanctions for producing his or her own design. The prospect of defending a criminal action might be enough to make the designer give in. What sort of fairness does that speak to?

I have some questions for the Minister on the thinking behind this move. Why does the Bill not state a requirement as to where the act occurs? On the face of it, there seems to be no reason why it should not cover making unauthorised copies elsewhere in the EU, where the acts would infringe an RCD, so the defence that it did not infringe the right in the design would not apply.

Secondly, why does new Section 35ZA define “registered” designs as including “registered Community” designs? Does this not leave open whether the offence might not be committed by copying, or dealing in copies of, a foreign-registered design, for example those with a Benelux registration?

Thirdly, following the implementation of the designs directive, the scope of registered design protection has been broadened. This gives rise to the situation where registered design right is now infringed by use of the same design in different products. Can the Minister confirm that, if a design is registered in relation to one type of product—for example, an image of Bugs Bunny on a mug—that design would be infringed if the person featured it on another product such as a pillowcase? If so, in the latter case, would criminal sanctions be applied?

New Section 35ZA(3) applies to dealers infringing products—both importers and traders. One might wonder how stockists of, for example, Samsung Galaxy phones might have behaved towards what were initially allegations made by Apple in respect of infringement. At that point, if the Bill had been enacted, dealers in those products would have faced criminal liability, and up to 10 years’ imprisonment, if they had made an incorrect judgment call as to whether the Samsung products they were attempting to sell would infringe Apple’s registered design. One can only imagine that this would have done serious—and, as it turned out, unnecessary—harm to Samsung.

New Section 35ZA(3) 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? What is the Government’s reason for removing the defence of reasonably believing that the defendant’s design was not an infringement—that the designs were different and would not produce in the informed user the same overall impression? This is often the crux of design infringement cases between competitors. It is worth thinking about what Judge Birss said in the Apple v Samsung case in holding that Samsung products did not infringe Apple’s registered designs:

“This case illustrates the importance of properly taking into account the informed user’s knowledge and experience of the design corpus. When I first saw the Samsung products in this case I was struck by how similar they look to the Apple design when they are resting on a table. They look similar because they both have the same front screen. It stands out. However to the informed user (which at that stage I was not) these screens do not stand out to anything like the same extent”.

If Section 35ZA had been in force, would not Samsung have escaped criminal liability only because it got the judgment call as to infringement—the views of the informed user—right? Had Samsung got that wrong, there would be no defence. Is this what the Government really intend?

Absent either a positive requirement of dishonesty or some sort of broader defence, where a person reasonably believes that they are not infringing, this law could have a significant chilling effect on competition—so much for a Government who trumpet themselves as supporters of competition and opponents of unnecessary regulation.

[Lord Clement-Jones]

My Lords, I shall be very brief. The beauty of Committee is that entirely opposing propositions can be put forward by the same person. It is only when we get to Report that we have to get serious by being absolutely clear about the propositions being put forward. I therefore do not intend to respond in great detail to the noble Lord, Lord Stevenson, who, I believe, was taking an argument out for a trot. Earlier in Committee, I previously talked about frightening the horses and I am afraid that we are back to horse analogies. It has been an entertaining trot in many respects.

The way that the argument was put together misunderstood what happens in court. It is about the adducing of evidence. It was reassuring that the judge listened to the arguments and evidence and felt as a result that he understood far more about the genesis of the design right. Of course, in a criminal court you add mitigation to all that. It is not worth suddenly locking up people as a result of being prosecuted for design infringement. If you do something reasonable in the eyes of a criminal court in such circumstances, you will be able to mitigate the offence, even though technically you may be guilty of it.

I am afraid that I do not accept the noble Lord’s argument. However, I have wanted to use the expression “a fortiori” for many years in Committee; if you have the ability to prosecute in a criminal court for an infringement of registered design, you should have that ability for unregistered design. If you have it for copyright, you should be able to prosecute for unregistered design. If you have it for trade marks, you should have it for unregistered design. All these intellectual property rights may be complex but they are a vital underpinning for our creators and our creative industries. I am unashamed in my wish for those creative industries to thrive in this country and for their intellectual property protection to be as solid as we can make it, without falling unduly into a monopoly situation, about which the noble Lord, Lord Borrie, is ever vigilant, I am glad to say.

Intellectual Property Bill [HL]

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Tuesday 11th June 2013 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, with his usual incisiveness, the noble Lord, Lord Clement-Jones, immediately spotted what I was up to. Far from frightening the horses, which is not in my nature—it may be the first time that that appellation has ever been suggested, as it is usually the other way around, with me running away from the horses—my point was to try to get up a debate about some of the underlying themes. We have just had that, so there has been success.

I would cavil at only a couple of the points made in the initial response. I did not entirely rely on professors, wonderful though they are in supplying us with information. I quoted extensively from the Bench. I would not want in any sense to choose between the two contributions, but I think that their sum was rather powerful. I simply lay that on the table.

The noble Lord, Lord Clement-Jones, ended on an interesting point, which is that it is true that, when analysed back, the unregistered design right is in essence copyright by another name. However, it provides in the design production capacity the same sort of protections that we were debating on the ERR Bill in relation to 3-D objects, which the Government have taken powers to turn away from. I think that, under that design regime, copying more than 50 of an artistic design that was turned into a 3-D object and manufactured gave protection for 25 years. I might be getting mixed up between the rights. Yet that 25-year period has been replaced by the life of the designer plus 70 years. One could ask, but one would immediately run up against the points made by my noble friend Lord Howarth, why they have chosen to retain the design approach—a limited period of five years then five years, plus a further five—for unregistered designs and not taken what might be the logical step of saying, “If it is copyright by another name, why did we not move that way for the whole of this area?”.

[Lord Clement-Jones]

Perhaps I can help the noble Lord. Your Lordships may remember that the Section 52 debate during consideration of the ERR Bill was about works of artistic craftsmanship. There is a difference between the generality of design rights and those particular works covered by the items that the noble Lord is discussing.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, this concerns a relatively minor point and it is certainly a probing amendment, to which I am sure the Minister will have no difficulty in making a response.

When reading the consultation process, we were intrigued to discover that the Government had consulted widely on whether appeal routes could be considered within existing systems largely through the patents county court or whether there was some value in transferring appeals to the High Court. This amendment is intended to probe that decision and to ask the Minister to respond a little more on it.

With the welcome news that a small but important part of the unified patent court will, it is hoped, be located in the United Kingdom and perhaps in more than one location, it would be to the public benefit if those who practised at this Bar or who were judges in the Bar were able to gain the maximum exposure to the issues that are likely to arise during consideration of the various points that will be routed through this legal process. My first point is simply a general feeling that more expertise should be spread around and that more people should be engaged, and that therefore cutting out the patents county court seems a rather odd decision.

Secondly, there is also a need to raise more public understanding on this matter. When court cases that involve these issues are picked up, they sometimes, as we discussed in relation to an earlier amendment, catch the public eye. That can sometimes help to get people interested in this whole area and stimulate them to become more involved. That is another reason for tabling the amendment.

Thirdly, we heard in earlier discussions, and when we were discussing this matter with the Minister, that the Bar is currently quite small and the court’s activities quite narrow. Therefore, the more court cases in which it is involved will gradually make this more of a sustainable option.

All those things suggest that perhaps ruling out, de facto, the available route for taking appeals through to the PCC system is a little short-sighted. We may not have the correct process or procedure here—we are not legal experts in this department—but we wonder whether there is an issue here that might need further consideration. I beg to move.

[Lord Clement-Jones]

My Lords, the amendment put forward by the noble Lord, Lord Stevenson, is of considerable interest. The very welcome aim and objective of Clause 10 is clearly to provide the most cost-effective and quick alternative for appealing against a registrar’s opinion and for distinguishing between matters of law and fact and so on. It is very interesting to suggest that it is the patents county court that would specifically deal with that, because that would meet the need for a point of law to be referred to the court in a cost-effective way. Rather like the noble Lord, Lord Stevenson, I do not know what the practicality of that is, but I certainly hope that the Minister will explore the suggestion because it seems to be consistent with the aims of the rest of Clause 10.

It is certainly interesting that Clause 10 has been constructed, as I understand it, very much in the way that current trade marks appeals against the registrar’s decisions are made, and that seems to commend it. What I do not know is whether the trade marks legislation refers to the High Court or whether there is some other route for a legal point to be determined on appeal in trade mark cases.

Enterprise and Regulatory Reform Bill

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Thursday 31st January 2013 Grand Committee

[Lord Clement-Jones]

My Lords, I shall say just a few words on the Minister’s very welcome amendments in response to the 10th report of the Delegated Powers and Regulatory Reform Committee. It is very interesting. The committee demonstrated the value of a collective memory, as it took us all back to the Digital Economy Act and the comments that it made at the time; it has been entirely consistent. It is good to see that the Government have responded. However, I wonder, especially in light of the fact that the Minister has confirmed that the affirmative process will be used for Clause 68, whether he will also confirm that the affirmative process will be used when the Hargreaves exceptions are introduced under the European Communities Act. The Minister has clearly stated that the Government will not be using Clause 66 when those exceptions are introduced; it will be purely for penalties. We very much welcome the assurance that the Minister gave on Monday. However, will he take the opportunity to confirm that the scrutiny process will be by the affirmative procedure of both Houses when those draft statutory instruments come under the ECA procedure?

[Lord Stevenson of Balmacara]

My Lords, we on this side will also be interested to hear the answer to that question, although I think I gathered from remarks made previously in Committee that that is the case. We will look forward to hearing about that. Other than that, we are very grateful to the Minister for bringing forward these amendments, which, as he says, go a step further than the DPRR Committee recommended, but are none the less welcome for that.

--- Later in debate ---

[Lord Clement-Jones]

Amendment 33 is inspired by the Creators’ Rights Alliance which feels that the contractual scales are very much weighted against it. I do not often make common cause with Consumer Focus but I am delighted that it supports the amendment. Its brief on the amendment puts the position rather well. It states that the Copyright, Designs and Patents Act 1988 makes creators the first owners of copyright, and that creators’ ability to assign or license their copyright to others is central to the overriding aim of copyright: that is, ensuring that creators benefit financially from their works. However, in the UK, creators frequently assign all their copyright for a one-off payment to intermediaries, such as publishers or record companies. Individual creators are frequently at a disadvantage when negotiating contracts with intermediaries, and some creators complain that they are unfairly pressured into assigning all their rights for a one-off payment.

The 2012 research of Consumer Focus found that 77% of British consumers expect that a fair share of the money they pay for music, films and e-books goes to the artists who created the work. The ability of the copyright system to ensure that creators receive a fair remuneration is central to public support for the principle of copyright. I agree with Consumer Focus that removing the copyright exclusion from the Unfair Contract Terms Act 1977 should be central to the Government’s efforts to build a fairer copyright system that supports economic growth and innovation. How about that, my Lords? Many creators work as freelancers or microbusinesses. They are the bedrock of the creative industries and deserve the protection provided by the Unfair Contract Terms Act. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, extended collective licensing requires fair contracts. People who work in the creative industries are already seeing intensified efforts by many publishers and other intermediaries to coerce individuals who are sole traders into signing away all rights to their work. Those who succumb to this blandishment would be deprived of the income that the ECL provisions in the Bill are supposed to offer. Therefore, the failure of the Bill to include measures to level the playing field for negotiation of contracts undermines the purposes of copyright in promoting fresh creativity. These are not just matters of concern to professional creators, vital though it is to the creative economy that the possibility of making a living as a professional creator is defended. Every citizen has an interest in enforceable creators’ rights and fair contracts now that so many people are publishing and broadcasting their own works through social media.

There is a well known example of the problems that this can cause. In late 2012, the Instagram online photo-hosting service attempted to impose a contract of terms of service that would allow the company to sell users’ photographs to advertisers. This was defeated only after alert users boycotted the service. Legislation will be required to ensure that the price of creativity is not an eternal vigilance which distracts from the work of creation.

The issue of unfair contracts typically arises in two circumstances: “take it or leave it” contracts presented by large businesses to sole-trader professional creators, who are informed that no negotiation will be contemplated; and “click-wrap” contracts offered to those, professional or amateur, who use online hosting services to store or share their creations in words, music or images.

Amendment 33 would bring contracts dealing with copyright works within the terms of the Unfair Contract Terms Act 1977. This would remove an inexplicable exemption and allow at least some challenge to the contracts being foisted on many creative members. I support the amendment.

Enterprise and Regulatory Reform Bill

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Monday 28th January 2013 Grand Committee

[Lord Stevenson of Balmacara]

I shall speak also to the other two amendments in the group which are in effect variations on a theme. Article 17 of the Designs Directive (98/71) and Article 96(2) of the EU Design Regulation (6/2002) leave to member states the freedom to regulate the extent of protection offered by copyright to designs. The amendments in this group seek to pre-empt what the Government intend to do in this complex area, which is to repeal Section 52 of the CDPA, by means of a general fair use provision and a narrower images exemption.

Amendment 28DZB seeks to protect the interests of many of the third parties affected by the Government’s proposal: those who have created images of existing designed articles. This includes publishers who have included images of old designs in their works, museums, individuals using images of design on websites, educators wanting to use images in teaching, photographers, picture libraries and so on. Many of these people will have invested in the production of images and films of designed articles when it was lawful to do so. Their interests are not likely to be protected by a transitional rule allowing stocks to be sold off; every time the images are shown in public, or reproduced, there will be an infringement.

This images exemption seeks to protect these third parties by allowing the making and exploitation of two-dimensional images and films of designed articles which have been placed on the market. In fact, it goes a little further than protecting these third parties during a transitional period, as it will permit such images to be created and sold in the future. This is a narrow derogation from the serious expansion of rights of design proprietors by the repeal of Section 52 and, in my view, does not prejudice the normal exploitation or the legitimate interests of the copyright holder. I think there is a major issue here, and I hope very much that the Minister will have further thoughts on this issue as he listens to this debate.

Amendment 28DZC builds on the breadth offered by the directive and the regulation. As drafted, the provision seeks to minimise the uncertainty inherent in a fair-use defence, such as that available generally for copyright under US law, with its white list and black list of deemed fair and unfair uses, leaving other uses to be judged in the individual case by reference to relevant factors.

One goal of this amendment is to protect follow-on designers: those who incorporate parts of old designs but transform the totality. It is well known that designers build with and on the design ideas of their predecessors. I believe the extension of copyright term to life plus 70 will make this much more difficult because of the sheer length of the term and because copyright protection is stronger in many ways than design protection. In my view, this issue has not been given sufficient weight, as we need to give careful consideration to the needs of future generations of designers.

Under existing design law, copying a part of an old design and incorporating it in a new, transformed design would not infringe any of the 25-year registered design rights unless the overall design produces on the informed user the same overall impression. However the copyright test is different. Copyright prohibits reproduction of any part of a protected work. One of the proposed white list of fair uses ensures that no use of a copyright-protected design infringes unless it would produce the same impression on an informed user. In short, it harmonises the copyright test with the EU design test.

Another goal is to protect educators, publishers, film-makers and website operators who use images of designed articles in their teaching, in their books, in their films and on their websites. These uses would be white listed as automatically fair. The black list deems unfair any use of a design in making an article which does not credit the original designer. It may be fair to start making old designs which are no longer being marketed—for example, fabric or wallpaper designs—particularly where the designer or design owner cannot be found. This clause indicates that it would not be fair to do so without indicating the origin of the original design.

However, the debate on this issue revolves primarily on whether the Government are right to delete Section 52 of the Copyright, Design and Patents Act 1988, whether by so doing and ending the current regime of registered designs they have fully considered all the issues which flow from that decision, and the implications that arise for products which are or are about to be out of rights protection under the present registered design period of 25 years, which will in future be in copyright for a period of 70 years after the death of the designer.

There is, of course, a very good case to be made for letting industrial designers have the same protection for their efforts as is available to composers, writers and the like, but I think there are some real questions about this issue, which might suggest to the Government that a pause for reflection before implementing this major change might be sensible.

One practical effect of this repeal will be to make replica versions of classic designs, such as Jacobsen’s egg chair, unaffordable to many consumers. Additionally, the creative freedom of future designers will be constrained because of the need to avoid breaching the copyrights of older predecessors, which cuts across the very essence of much industrial design.

Why was this proposal not preceded by a full consultation with stakeholders? Why has the impact assessment that has been published in fact got very little detail about the impact? Moreover, the assessment seems to have failed to acknowledge the impact on anyone other than designers, those who make and sell replica designs, consumers and the Government themselves. Would the Minister not agree that this initiative has not been handled properly?

The Minister may well argue that the Government had no option but to legislate. If that is the case, can he confirm that the Government are rushing to legislate on the basis of one recent European case, Flos SpA v Semeraro Casa e Famiglia SpA, which has been reported recently? The case concerned the design of the famous Arco lamp, consisting of a long, curved, metal arm supported by a marble block and finishing with a silver globe-shaped lampshade. I should declare an interest since I have one of the original design, fully paid for, at home. The design was created in 1962 by the Italians Achille and Pier Castiglioni, and any industrial design protection the design had once possessed has lapsed. Flos nevertheless claimed copyright in the lamp and that it had been infringed when Semeraro imported its Fluica lamp into Italy from China.

I am no lawyer, but I think we need to be sure that the UK response to Flos is appropriate and proportionate. The Government have decided on the basis of this single and recent case that we should abandon the whole of our registered design margin of appreciation. Surely the better approach would be to try to maintain Section 52, as that was explicitly agreed between the UK Government and the Commission during the process of adoption of the design directive. For the avoidance of doubt, as I have already said, there clearly is a good case for giving industrial designers the same copyright protection as applies to other creative industries, but the fact is that we currently have a different regime, and harmonisation of design and copyright should not be an end in itself or be driven by one isolated case.

The impact assessment is far from complete, but it admits that the reform of Section 52 will harm consumer welfare as classic designs—those that are more than 25 years old—will be re-monopolised. Replicas, currently available at some 15% to 20% of the price of the original, will no longer be available. No opportunity has been taken for consumers to be consulted. Moreover, there are those who argue that the impact assessment significantly underestimates the other costs that will arise, particularly because of its focus on furniture and three-dimensional design.

The Government believe that the change would encourage innovation and investment in design, but this is supported by the flimsiest of arguments in the impact assessment and no new evidence is offered to explain why the balance of interests between designer and owner, competitors and consumers, should be drawn differently today than in 1988 or indeed in 1994-95 when the Government successfully negotiated to retain Section 52 of the CDPA.

I am also concerned—and here I echo the comments made recently by my noble friend Lord Howarth—that as yet we have no idea what the traditional arrangements will be when Section 52 is repealed. Will it be on existing stocks and on articles which are out of copyright and which will now gain further periods of protection? Surely we need to see the draft proposals in this area as soon as possible and certainly before Report.

In conclusion, I should like to return to the question of the impact that this change will have on firms whose registered designs have come out of protection but which may now regain copyright protection to the detriment of consumers but to the benefit of rights holders.

I mentioned the egg chair, but it has been suggested to me that another area which will be affected is wallpaper. Wallpaper is within the current scope of Section 52 and is not in the exclusion for matters of a “primarily literary and artistic character”, so the change may well benefit companies in this field. The Minister will be aware of the firm Osborne and Little, which is primarily a wallpaper maker, founded in 1968. As I understand it, designs that were first produced and sold by that company between 1968 and 1987 will, if this clause goes forward, come back into copyright. It might therefore be for the benefit of the Committee if the Minister could confirm whether his right honourable friend the Chancellor of the Exchequer has been alerted to this change, as it may be of some considerable interest to him. I beg to move.

[Lord Clement-Jones]

My Lords, I strongly support Amendment 28DZB, and I shall also speak to Amendment 28EB. More particularly, in view of the very cogent introduction to Amendment 28DZB given by the noble Lord, Lord Stevenson—it was a tour de force, in my view—the fact is that Clause 65 looks more problematic the more one looks at it. The problems are exacerbated as there was no prior consultation by the Government on these provisions, nor is any cost or benefit set out in the impact assessment. Indeed, there has been no really authoritative review of the impact of the ECJ case mentioned by the noble Lord—Flos v Semeraro—and on whether it really does oblige the UK to repeal Section 52.

On the one hand, the design industry says that it has limited benefit, covering only works of artistic craftsmanship and only then pre-1989 designs and the introduction of the unregistered design right regime. The industry also says that works of art produced before 1957 would not benefit from the full copyright protection. On the other hand, many, including the publishing industry and the art and museum world, are very concerned about the impact of the clause on their ability to produce two-dimensional images of these kinds of artistic works, as the noble Lord, Lord Stevenson, has explained.

The proposed new clause is intended to apply the same term of copyright protection to artistic works as the term enjoyed by other copyright works—that is, the lifetime of the creator plus 70 years following their death. Currently, where more than 50 copies of an artistic work are manufactured, the term of copyright is only 25 years.

Publishers are rightly concerned about the impact that this clause may have on the publishers of books that include images and descriptions of artistic works which will now be subject to extended copyright. Such publications would be likely to find themselves retrospectively in breach of copyright. Without this kind of amendment, the clause could, as the British Screen Advisory Council has emphasised—I think that my noble friend Lady Brinton will be extremely interested in this—even include props used in a film and articles in a location where filming has taken place so that this is deemed to be copying of an artistic work which would otherwise have been permitted by Section 52. The position of websites, so important for public access and education, would also be uncertain. It would be even more disastrous if retrospective clearance were required.

I strongly support Amendment 28DZB, which would put this matter beyond doubt. I was delighted to see that it is also supported by the V&A, which is as good a judge as anyone on these matters and is able to take a balanced view—again, we have the word “balance”. However, I do not support the introduction of the novel concept of fair use in Amendment 28DZC, although I understand the motive behind it.

As a preferable alternative, Amendment 28EB, suggested by a group of professors of design and others, tries to meet the needs of follow-on designers—the designers of today and tomorrow that the noble Lord, Lord Stevenson, talked about. There are two concerns that underpin this amendment, particularly from those who have a great deal to do with up and coming designers. Copyright, as they explain, is in important respects more restrictive on follow-on designers than the protection given by community and national registered and community unregistered design rights, which limit protection for the making of articles which do not produce on the informed user a different overall impression. So if a designer uses part of an existing designed article but incorporates it in something that overall appears different, under the community registered and UK registered design, there is no infringement. In contrast—and I know that the noble Lord, Lord Stevenson, put this in other words—copyright has been interpreted to prohibit the reproduction of any part which is itself original in the copyright sense of involving creative choices. So if a motif from a textile or wallpaper—we are back to wallpaper—is copied but put in a very different context, there will be infringement of copyright, but not design rights. These professors say that the difference is not widely appreciated, as it depends on a detailed understanding of each legal regime, added to which we are only starting to get court decisions on the interpretation of the community design test and the EU copyright notion of reproduction in part.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, as originally drafted and debated in another place, this clause equipped the Government with wide-ranging and far-reaching powers to amend, remove or introduce exceptions to copyright via secondary legislation. It caused a fair amount of alarm and a lot of correspondence from those who were following the debate in another place. Many noble Lords present today will have received correspondence about this.

The amendments made during Report in the House of Commons clarified that the regulations,

“may make only such provision as may be made under subsection (2) of section 2 of European Communities Act 1972 or such provision as could be made under that subsection if paragraph 1(1)(d) of a Schedule 2 did not apply”.

I think that means that the Government’s stated aim is to,

“make it clear that [the clause] offers no further power than Parliament already has to make changes to copyright exceptions”.

However, we are disappointed that the language and scope of the clause continues to focus on exceptions to copyright, rather than criminal penalties, which ostensibly is its purpose.

If the Government’s intention is to safeguard criminal penalties for copyright infringement—which is absolutely necessary—we cannot apprehend why there continues to be such a resistance to making that intention unequivocally clear on the face of the Bill. Many of our correspondents would like to see this clause deleted in its entirety. Indeed, a number of proposals have been made in that respect. We have, however, proposed that amendments that seek to narrow and clarify the intentions of the clause in line with the Government’s stated aims, by stipulating that each proposed exception to copyright is subject to an individual statutory instrument and has its own associated economic impact assessment would be the right way forward. Reform of exceptions must not be bundled into a single SI.

Seemingly minor amendments related to changes in the scope of copyright exceptions can have significant commercial consequences for organisations that invest heavily in content creation and preservation. Each individual exception requires careful consideration. I beg to move.

[Lord Clement-Jones]

My Lords, I strongly support the amendments put forward by the noble Lord, Lord Stevenson. The stated aim of Clause 66 is to ensure that where secondary legislation is used to amend copyright exceptions, the existing penalties for copyright infringement would remain unchanged. This is stated in paragraph 506 of the Explanatory Notes. This stated aim by itself is unobjectionable. However, throughout the Bill’s passage through the Commons, MPs and outside organisations expressed serious concerns regarding the wide drafting of the clause—then Clause 56 and 57. The drafting was too broad and potentially involved the Government having significantly greater powers to alter copyright exceptions by secondary legislation than they currently enjoy. The Government amended this clause on Report. An amendment introduced on Report in the Commons permits the Secretary of State by order to change copyright exceptions within the scope permitted under subsection (2) of section 2 of the European Communities Act 1972—implementing European directives—and repeals paragraph 1(1)(d) of Schedule 2 to the EC Act in respect of such changes.

The new wording to Clause 66 gives some but not enough reassurance or certainty that the clause will be limited in application to penalties. The Government’s explanation of Clause 66 refers to penalties. Clause 66,

“arose as a specific consequence of our wanting to keep the strong penalties needed to remove exceptions.”—[Official Report, Commons, Enterprise and Regulatory Reform Bill Committee, 12/7/12; col. 628.]

However, Clause 66 is headed “Power to change exceptions: copyright and rights in performances”. The clauses as added to the Copyright, Designs and Patents Act 1988, which they are intended to amend, will be headed “Power to add or remove exceptions to copyright” and “rights in performances” and the clause itself refers to copyright exceptions.

Furthermore, as the noble Lord, Lord Stevenson, said, there is no impact assessment and there has been no consultation on the clause. These amendments limit the clause to penalties—it removes the references to copyright exceptions. The Government have explicitly stated that they will not use Clause 66 to introduce exceptions. The Government stated that:

“Clause 56 is not part of the wider Hargreaves work but arose as a specific consequence of our wanting to keep the strong penalties needed to remove exceptions.”—[Official Report, Commons, Enterprise and Regulatory Reform Bill Committee, 12/7/2012; col. 628.]

Clause 69 is in many ways admirably concise in relation to penalties relating to copyright protection under the term directive. Clause 69 refers explicitly to penalties and is unambiguous. Why can Clause 66 not be drafted similarly?

I understand that officials have said that Clause 66 may be used to amend two sections, Sections 72 and 73 of the CDPA, but those issues are the subject of court proceedings and it is doubtful whether Clause 66 as amended would be able to address the issues adequately, because they lie outside the European acquis communautaire and further primary legislation would be needed in any event.

It is not surprising that in a recent meeting with stakeholders, an official of the IPO said that all are agreed that the current wording of Clause 66 is confusing. Why do we not make everything clear and take on board these amendments?

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[Lord Clement-Jones]

I always get up when there is something to object to, but in this case I will thank the Minister for that reply. I am sure that the noble Lord, Lord Stevenson, will make a very positive response.

[Lord Stevenson of Balmacara]

My Lords, he does not give me much leeway, does he? I thank him very much, and I withdraw the amendment.

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[Lord Clement-Jones]

My Lords, I realise that I failed to speak to Amendment 30, so if I may I will just finish this group.

An orphan works license must provide remuneration for relevant rights holders, specifically the holding of money in escrow to remunerate rights holders who come forward within a certain time period. New Section 116C(4) of the Bill states:

“The regulations must provide for the treatment of any royalties or other sums paid in respect of a licence”.

That is welcome, but could be much clearer using the more broadly recognised term of “remuneration”. While royalties are common in the music industry, in the publishing industry royalties are used to describe payment made solely to authors. The word “remuneration” is also preferable for the avoidance of doubt as distinct from compensation, which would suggest a need for rights holders to prove harm before being able to receive their monies.

[Lord Stevenson of Balmacara]

My Lords, I want to make it clear that we on this side support the ECL approach in general. The reason for supporting these particular amendments is to make sure that the issues that they raise are probed. I look forward to hearing what the Minister has to say.

However, it is worth putting on the record that there are still a lot of reservations from individual authors and photographers about the potential impact of an ECL scheme, particularly where there is not a collecting society—

[Lord Clement-Jones]

No.

[Lord Stevenson of Balmacara]

I beg your pardon?

[Lord Clement-Jones]

If I can clarify, we are still on orphan works amendments, which are designed to improve the orphan works provisions in the clause.

Live Music Bill [HL]

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Friday 15th July 2011 Lords Chamber

[Lord Clement-Jones]

Dancing is often spontaneous. I am certain that the noble Lord, Lord Colwyn, engages in spontaneous dancing on frequent occasions, perhaps even when he is playing a musical instrument at the same time. However, technically speaking dancing in those venues, in licensed premises, requires a licence. The Bill is not designed to impact on the existing law. Future consultation may suggest that we can deregulate that—I firmly hope that we can, especially in small venues—so that the noble Lord will be freer to stand up and spontaneously dance in future, but that is not the intention behind the Bill.

[Lord Stevenson of Balmacara]

My Lords, I do not want to engage in the question of whether we will spontaneously join in any activity this morning, because it is still early, but I reassure the House that we support the amendment.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, under Section 172 of the 2003 Act, the Secretary of State may make an order providing for the relaxation of opening hours to mark an occasion of exceptional international, national or local significance. Such an order was made in respect of the recent royal wedding and I hope that there will be many more to come.

The current Section 177 of the Act, so far as it relates to premises licensed to supply alcohol for consumption on the premises, provides that conditions relating to live music do not have effect at any time when the premises are open for the purposes of being used for the supply of alcohol for consumption on the premises. Therefore, with regard to the licensing hours extension in respect of the royal wedding, the effect was that the disapplication of conditions relating to music would have been extended because Section 177(2) is linked to the time at which the premises are open for the supply of alcohol.

However, new Section 177(1) and (2) contained in the Live Music Bill provide that, so far as alcohol-licensed premises are concerned, conditions relating to live music will not have effect only if the music takes place between 8 am and midnight, or 11 pm as a result of other amendments. Although Section 172 of the 2003 Act allows for the relaxation of licensing hours for special occasions, as drafted the Bill would not allow the disapplication of conditions on live music to run in tandem with any licensing hours extension.

Amendment 10 allows the disapplication of conditions relating to live music to apply where extended licensing hours are granted as a result of a licensing hours order. In so doing, it preserves the benefit afforded to alcohol-licensed premises under the existing Section 177. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, we support the amendment. It makes sense in terms of how current licensing operations work and I think that it would add to the general jollity.

Police Reform and Social Responsibility Bill

Debate between Lord Clement-Jones and Lord Stevenson of Balmacara

Thursday 16th June 2011 Lords Chamber

[Lord Clement-Jones]

My Lords, I shall not detain the House too long. It would be easy to spend time talking about some of the schemes that would justify an appropriate discount. However, I shall first move Amendment 241T. By a strange quirk of grouping, the Minister has already partly responded on the concept of a discount for these community-type schemes. The effect of these amendments would be to require the levy to be reduced by 50 per cent per premises participating in well established, recognised corporate responsibility initiatives—specifically, Best Bar None, business improvement districts, Purple Flag, Pubwatch, community alcohol partnerships and other similar watch initiatives, all of which demonstrably reduce the incidence of crime and disorder in town centres. These could be undermined if participating businesses were required to fund all these bespoke schemes and a more general levy. To acknowledge the contribution and investment that industry has made to improving standards and addressing challenges in the night-time economy, particularly in town and city centres, it is therefore appropriate that these high-profile initiatives are identified in the Bill as requiring a reduced levy. This will also safeguard the initiatives themselves and encourage further take-up in areas where such partnership approaches do not yet exist.

I dare say that many of us have received correspondence from some of the projects, particularly the business improvement districts. I have received several of those. The Nottinghamshire Leisure business improvement district experience is extremely interesting. Some of the correspondence relates to the community alcohol partnerships, which have also been very successful. I understand that the Government plan to recognise in guidance, and perhaps in regulation, the nature of these schemes and the fact that they will receive discounts. However, I hope that they can be a little more forward in the Bill by recognising that that will definitely be provided for. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I support the previous speech and the amendments that it introduced. On this side of the House, we believe that premises that work with the police and local authorities to minimise crime and disorder should qualify for a reduction in the late night levy. I take the point made by the noble Lord, Lord Clement-Jones, that it would be helpful if this could be put in the Bill, not just because we like to see things in legislation but because it is so important that we recognise what they are doing.

In many cases, for example, these venues are safe havens for young people. If you put young people in a protected environment rather than having them out on the streets you are doing some public good. In a sense, that is something that we want to encourage and we would be grateful if it could be considered in that way. Well run and responsible venues already participate in voluntary schemes to combat anti-social behaviour, and if they are forced to close at midnight to avoid the levy then they will effectively be throwing their young clientele out of a safe venue onto the streets.

[Baroness Browning]

My Lords, licensing authorities will have the discretion to decide which of the exemption and reduction categories they will apply in their application of the levy. Although I am unable to accept these amendments, I welcome their overall intention. It is precisely these types of premises and the schemes that they run that we want to consider for reductions from the levy charge. However, the amendments would prejudge our public consultation on exemptions and reductions, which we will introduce through regulations.

We have already begun the design of that consultation through a number of working groups, with representatives of the trade, licensing authorities and the police. I would urge noble Lords to await this consultation so that we might have the opportunity fully to consider the views of our partners. There are many schemes, such as the ones mentioned this afternoon, that allow the business community to work together to address some of the negative effects of the sale of alcohol in the night-time economy. I support the principle that drives these local initiatives. However, there is a range of such initiatives and we need to consider the breadth of these schemes and how we might define workable categories for reductions. On that basis, I ask noble Lords not to press their amendments.