Lord Stevenson of Balmacara
Main Page: Lord Stevenson of Balmacara (Labour - Life peer)Intellectual Property Bill [HL]
Lord Stevenson of Balmacara Excerpts
Lord Stevenson of Balmacara
My Lords, I shall also speak to Amendments 5 and 6, which are in my name and in the name of my noble friend Lord Young of Norwood Green.
Clause 13 introduces two offences: unauthorised copying of a registered design, and dealing with unauthorised copies. Although these provisions have been welcomed by a small number of sectoral groups, the vast majority of businesses and representative bodies strongly oppose the introduction of criminal sanctions for design infringements. Many noble Lords will have received a copy of a letter from Sir James Dyson. He writes:
“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 infringement, 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 goes on:
“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”.
There is a real concern that the legislation, as currently drafted, will open a Pandora’s box of unintended consequences, potentially discouraging the very kind of legitimate, competitive risk-taking that policymakers have been keen to encourage as a driver of growth. The arguments that the Government have deployed until now are deeply flawed. They say that the treatment of design rights needs to be brought into line with existing copyright and trade mark legislation; that there is an anomaly between the application of criminal sanctions for copyright and trade mark infringement and the lack of equivalent provisions to stop the copying of registered designs. However, there are good reasons to treat design right infringements differently from piracy and counterfeiting. This is because the scope and validity of registered designs depends, as with patents, on prior art. As a result, the scope and validity of a design registration are never black and white but instead are open to a degree of interpretation. Indeed, relevant prior art may not even come to light until years later.
Lord Stevenson of Balmacara
I begin by thanking the Minister for his very full reply and his customary courtesy in dealing with all the points, for which I am most grateful. He sets a high standard in this House. However, let us be clear: we are talking about approximately 4,000 designs which are registered each year at the Intellectual Property Office and some 350,000 designers who suggest that about 18,000 unregistered designs are lodged with the asset database, so this is a very small proportion of the designs with which we are involved. We are probably arguing around a very narrow point but it is an important one. I want to come back to it, but before I do so I thank the Minister for his comments about Amendments 7 and 8, both of which we welcome, and which have gone a long way to answering points raised in Committee, for which we are grateful to him.
The issue that we are left with is the pleasing word “bafflement” which invaded the otherwise normally sane and sober noble Lord, Lord Clement-Jones. I am delighted to have struck a blow for those who believe in bafflement. However, I must say that I am not at all baffled by this. The situation is very clear: we are against criminalisation of this aspect of the design world. We accept that there may be a case for having as a very last stop a criminalisation process which would enable those who are constantly engaging in this sort of behaviour, or are doing so on such a scale, to be given appropriate penalties. The issue is whether or not the clause that we are debating has sufficient safeguards. My argument in Committee and today was that the Minister, on behalf of the Government, did not adequately defend why it was necessary to move from a very effective civil situation to criminalisation. However, I accept that it is important to consider whether criminalisation would help the design community. That is the question we have to resolve.
It is interesting that in his response in Committee and today, the Minister kept saying that these criminal measures would apply only to deliberate acts. I think he is using the mens rea argument, which is that if somebody has gone to the point of copying, by definition it must be intentional and deliberate. However, when discussing that, he used the word “deliberate”, which is what I sought to include in the Bill. Therefore, I am baffled in the sense that I do not understand why it is possible to talk about a criminalisation which is restricted to those who are deliberately engaging in this act, but not accept that it would be helpful to have that in the Bill. That is the important thing.
If we are talking about people who are blatantly ripping off individual designers, taking their designs, using them and obtaining financial reward from them without having paid for a licence, obviously there is a point where that has to become a criminal act. I am prepared to go along with that but the bar has to be set very high. I do not believe that it has been set high enough in the present wording. Therefore, I would like to test the opinion of the House.
The Earl of Erroll
My Lords, I rise briefly to support the noble Lord, Lord Clement-Jones, in this argument. I think that this provision should be exactly parallel to that for copyright. I would say that the Minister should have used these arguments in the copyright case to change that provision so that it was in line with the principles in this Bill—because I think that copyright is probably overprotected—but that is a different argument. However, I certainly think that the arrangements should be the same. At some time in the future we can rationalise, if we need to, the two arrangements so that they move together in the same direction. With the advent of 3D printing it is now quite possible easily to make a three-dimensional copy at not a huge cost, so I do not see the rationale for distinguishing 2D from 3D copying. 3D copies were not possible until very recently. Logically, the two principles should be aligned, as the noble Lord, Lord Clement-Jones, has just stated. Whether we think that this should be dealt with differently, in copyright or under this arrangement, is another matter.
Lord Stevenson of Balmacara
My Lords, I found a lot of what the noble Lord, Lord Clement-Jones, said very convincing and want to hear how the Minister will respond. The noble Lord made a very good case for taking the situation that we have currently, under which copying registered designs will be subject to criminal penalties, and asking why the very large number of unregistered designs that are lodged in a different register from the registered designs—with the IPO—cannot be given a similar sort of protection. I think that the arguments comparing that with copyright and trademarks are very persuasive. The noble Earl, Lord Erroll, made the point about 3D printing, which of course begins to muddle all our previous conceptions of what 2D and 3D design were about. Again, that will require some movement, if not now, in the very near future, in order to keep pace with the way that technology is changing.
Our Amendment 20 departs from the principles articulated by the noble Lord in moving Amendment 9 because we think that we have to take the situation as it is on the ground. As I have said before, there are 350,000 designers in the UK and UK businesses spend around £35.5 billion annually on design. These are substantial figures and make up a significant slice of our creative industries. However, the vast majority of designers rely on unregistered rights. There are 4,000 registered designs against 18,000 unregistered designs. Something like 99% of designers in the country rely on unregistered designs, and there has to be a question about how the Government will provide an appropriate framework for that development.
Our amendment suggests to the Secretary of State that there is another possible route to think about, which makes clearer what the effect would be of having a register of unregistered designs, even if that is perhaps a contradiction in terms. If it was possible to have within the government machinery some system that allowed a way to evidence the existence of the design right, and document its existence on a particular date, that would go some way to giving us certainty about cases, whether they were criminal or not, affecting the unregistered design right. We could perhaps use the copyright harm analogy to find a way for metadata to be applied to designs that would allow them to be picked up and trailed.
The noble Lord, Lord Clement-Jones, asked why there was a growing discrepancy between the registered and unregistered design right routes. Presumably, the Government have made a decision that they are going to bulk up what is available to those who have registered designs and give them more in the hope that that will persuade designers to sign up to the registered design route. But what will happen if they do not? The problems and difficulties will still be there, particularly in the fashion industry, where unregistered design is the mode that is used.
We need to do something and our Amendment 20 tries to make some suggestions that we hope the Government will listen to. Although we cannot support the proposal to criminalise the copying of unregistered designs as a matter of principle, we would be very interested in hearing how the Minister will respond.
Viscount Younger of Leckie
My Lords, the effect of Amendment 9, moved by my noble friend Lord Clement-Jones, would be to extend the proposed criminal sanctions to unregistered design rights. I thank my noble friend once again for presenting the Government with his strong views on unregistered design right protection. I can assure him that the Government are absolutely convinced of the value of the unregistered right and are very aware of its role in protecting small design businesses. That is why, following consultation, the UK right and its current term of protection was retained in the face of calls by some to remove it as a means of simplifying design law.
The United Kingdom has a very successful design industry and we tinker with the success of the industry at our peril. I am particularly concerned to ensure that any changes proposed in the Bill do not act as an additional burden on industry but enhance its accomplishments. As with all intellectual property systems, there is a delicate equilibrium between a reasonable return for creators and, on the other hand, access to the creation so that competitors can shape future innovation. This is the balance the Government have to be mindful of in the changes proposed. There is a real fear that extending criminal sanctions to unregistered rights will distort this balance for the following reasons.
First, the existence of the register represents a public database, which can be searched with relative ease. Third parties can quickly assess what has been registered and what has not. This means that they can take due notice of designs protected by registration with some degree of certainty. In particular, they will know accurately when it will be possible to copy a design with no degree of legal risk. With unregistered designs, there is the problem of not knowing exactly when the design right came into existence and the duration of its protection. This means that it is more difficult for third parties to discover when they can legally copy or exploit a design. Where information about the design of an article is limited but copying it attracts a criminal sanction, it is entirely possible that industry will become risk-averse. As I stated in Grand Committee, against the background of a threat of a criminal conviction, third parties are more likely to wait longer than necessary to be sure that a design is in the public domain before building on it, therefore extending the unregistered design right beyond its term and delaying potential innovation.
I will give your Lordships an example. A furniture manufacturer is aware of a rival’s design that is successful in the marketplace and knows that it is not protected by registration. That is easily discovered by a swift inspection of the registry. He is also aware that the unregistered design right is now protected by a criminal sanction. The manufacturer will have no ready knowledge of when the item was first protected—for example, when it was in a design document, made into an article or first marketed. These all affect the term of protection. To be on the safe side, it is likely that the manufacturer will avoid copying or even engaging in reasonable follow-on innovation until he is certain that the product is out of its term of protection. With registered designs, any potential chilling effect is much reduced by the certainty of facts on duration, scope of protection and ownership, which registration creates.
Secondly, the nature of the UK unregistered right magnifies the uncertainty problem. Unregistered right in an article can relate not only to the overall design but to the individual elements of the design. The unregistered design right can therefore be seen as a basket of individual rights. For example, a kettle may have design protection in its overall shape and configuration but also in its individual parts, such as the spout, the handle and the lid. The kettle may be one of a series of kettles, so different design components may have different timelines of protection. The handle may have 10 years of protection to run because it is new, the spout may have three years as it was used in an earlier version of the kettle, and the lid may be out of protection because it is an old design. None of this information will be readily available to a business which wants to use the design or aspects of the design itself. This creates a cumulative uncertainty about the rights, which is not shared where a design appears on the public register.
Thirdly, a chilling effect is likely to be more serious in particular industries. Some designers, such as those in the fashion trade, thrive on novelty, speed of change, imitation, and rapid turnover of seasonal ranges. It is in these industries where the Government have real concerns that criminalisation of unregistered designs, which are often relied on, would have a freezing effect.
Fourthly, the potential inhibiting effect on innovation that has been identified is likely to be a particular problem in relation to functional designs, which the UK unregistered right also protects. This problem does not apply to registered designs that specifically exclude functionality. I also remind noble Lords of a further issue that relates to functional designs, which could cause difficulties in criminal proceedings. Such technical complexity should be avoided in criminal proceedings if possible.
Finally, I will say something about the protection for unregistered rights holders and, at the same time, consider Amendment 20, in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, which would place, in effect, a reporting duty on the Secretary of State. I can assure noble Lords that the Intellectual Property Office is already aware of its responsibilities to SMEs and fully recognises the difficulty that designers face in enforcing their rights. The IPO will continue to work with representative groups for the design sector to help improve the situation for designers. There are many ongoing projects. For example, the IPO and the European design and trade mark office—OHIM—are working together to consider approaches to IP enforcement. This includes the costs of searching for prior rights.
The IPO currently funds IP audits to SMEs that are enrolled on one of our partner business support programmes. From next year, a number of these will be specifically allocated to design SMEs within the Design Leadership Programme run by the Design Council. This will help design-focused SMEs effectively to manage their rights, including unregistered designs, and the creation of audit trails. Such information is readily available from organisations such as the IPO and ACID.
I hope noble Lords will agree that by accepting this amendment the Government would be duplicating information already available. I have already referred to private companies such as ACID, which provide access to highly successful unofficial databases. The amendment would place the Government in direct competition with these companies.
The amendment also raises a number of questions. For example, would an official government-run unregistered designs database be compulsory for designers to use? What about the design rights that exist in other parts of the EU? These can have an effect on rights in the UK so would all European design rights owners be required to record their unregistered designs with the IPO?
These questions may warrant further thought. However, the Government do not believe that it is wise to legislate at this stage without more consideration, particularly given the ways in which the UK IPO is already working hard to ensure that designers are as informed as possible when making business decisions about their intellectual property. For example, the IPO will provide training to the Design Council’s business advisers, to help understand IP and the value of design rights, and to direct SMEs towards the audit programme. On that basis, I am not persuaded of the need for the noble Lord’s Amendment 20.
However, I would not want noble Lords to gain the impression that, in not extending the criminal sanction to the UK unregistered design, the Government regard unregistered rights as second-class rights. The Government recognise that the introduction of criminal sanctions for designs is an important issue that is subject to strong opinions. We believe that the sanction as drawn is the best option to maintain and enhance the success of the UK design industry.
My noble friend Lord Clement-Jones and the noble Earl, Lord Erroll, raised the issue of the discrepancy between protection for 2D and 3D works. There was some debate on this in Committee and it is worth reiterating a number of key points. In the view of the Government, this is a consequence of copyright protection vesting in the “work” that consists of a design drawing, and there is no direct protection of the 2D representation of the design per se. The protection arises as a by-product of the copyright in the work. As noble Lords will know, copyright will protect against the reproduction of the drawing where the defendant knows or has reason to believe that the reproduction is an infringement of the drawing. This is merely a coincidence, caused by the fact that the drawing is a literary or graphic work and nothing more, and is a result of the existence of parallel IP regimes that coincidentally overlap in this case.
It is questionable that the existence of this anomaly, which is hardly unique in IP law, counsels equalisation or harmonisation by criminalisation of unregistered design right. As the noble Lord, Lord Howarth of Newport, who I see in his place, stated in Grand Committee:
“My Lords, consistency is not necessarily a virtue and I think that we should be very careful in the field of intellectual property. We legislate not simply out of tidy-mindedness or a desire to achieve a satisfying consistency by transferring rules and regulations that may have applied relatively successfully in one area to another”.—[Official Report, 13/6/13; col. GC 392.]
Lord Howarth of Newport
My Lords, the noble Lord, Lord Clement-Jones, takes us back quite nostalgically to the days of the passage of the Enterprise and Regulatory Reform Bill. He is absolutely right to remind us of the importance of the metadata issue. It would be welcome if the annual report were to include a section describing such progress as may be being made on that important issue.
I will speak to Amendment 14, in my name. I very much welcome the commitment that the Minister has made in the Bill to the publication of an annual report. Policy on intellectual property is arcane and is vigorously contested among specialists and between special interests. It is very important—its effects are far-reaching—yet it is not well understood, either by Parliament or the public. I therefore hope that the annual report will be more ambitious than is suggested by the terms of the clause in the Bill. I want it to range rather more widely to help Parliament and the public better understand the major policy issues and the principles which animate the Government in taking their specific decisions and formulating their broader policy.
I take it that the role of government is to judge the balance of the public interest in relation to intellectual property between affording protection to creative individuals and enterprises, and opening new possibilities as early as possible to the wider public, consumers and other originators of ideas and knowledge, such as academics, designers and other creative people.
Of course we need to protect intellectual property in certain circumstances. It is essential to incentivise innovation. Often there is a strong public interest in that—but not invariably. It should not be axiomatic that we grant more and more intellectual property rights. Applications should be judged on their merits. The Intellectual Property Office and the Government should not be negative but should be sceptical about applications, and should all the time be ready to question the consensus. While it is desirable to achieve an alignment of international regimes, for example through agreements at European Union level, it is important not to rest on the achievement of those agreements. As the noble Viscount reminded us, consistency is not necessarily a virtue.
Intellectual property is a form of monopoly. It leads to some rigging of the market and restraint of trade—and rigged markets and restraint of trade carry with them inefficiencies and opportunity costs. Others are restrained from accessing or exploiting new knowledge as early as they might do. Price competition is postponed. The holders of intellectual property, being protected, may become complacent and less innovative. That would be an ironic outcome of a policy intended to promote innovation. The incumbent may try to use monopoly power to crush rivals and new challengers who dare to enter the field.
Historically there have been vast benefits when decisions have been taken not to patent new discoveries. Jonas Salk declined to patent his invention of the vaccine for polio—to vast human benefit. Sir Tim Berners-Lee thought it was wrong to patent the world wide web. While it will be many decades before we can begin to assess the benefits or otherwise of that decision, it certainly created large new freedoms.
In Committee, my noble friend Lord Stevenson and I used the historical metaphor of the enclosures movement. We agreed that we preferred intellectual commons to intellectual enclosures. As the House will know by now, my view is that intellectual property is a necessary evil and that we should keep it to a minimum—just enough but no more than is needed to incentivise. Yet the tendency of policy has been to lengthen protection, and Governments have been prone to brag about the number of patents that are held in the UK, as if it was a measure of success. It is a measure of inventiveness, but it is also an index of economic rigidities. The Government should not simply equate maximising the profits of intellectual property holders with the public good. The question must be asked: cui bono?
It is commonly preferable to enlarge opportunities for small and medium-sized enterprises rather than to buttress the monopoly strength of giant multinational corporations. If we want to generate more jobs, spread wealth, tackle the negative externalities of certain business practices and raise more taxes, it may be preferable to support SMEs as against corporate giants.
The methodology needed to establish the necessary minimum has to be pragmatic and based on an assessment of the benefits and disbenefits of protection in relation to the economy, social well-being, research and culture. There are different effects of intellectual property depending on different timescales, industrial sectors, amounts of market share and geographical scales, just as there are different effects between luxuries and necessities.
The Government’s vision should not just be of what is in the narrow interest of the United Kingdom. They should not take the view “my country right or wrong” in relation to intellectual property. We should not always reflexively back UK plc. As we move towards a world with a population of perhaps 10 billion people and with vast migrations, it will be enormously in the interests of the United Kingdom that the poorer peoples of the world should be able to make rapid progress in knowledge, education and the growth of their economies. Judgments about intellectual property policy need to be economically farsighted, humane, ethical and wise. They will be very difficult indeed to make in, for example, the burgeoning field of the life sciences and where bioethical issues are at stake. I very much welcome the judgment by the US Supreme Court in relation to Myriad Genetics. However, as the noble Lord reminded us in Committee, it poses a significant challenge to the European Union. The EU biotechnology patents directive may need to be reconsidered in the light of that American judgment. As we see the development of techniques of so-called human enhancement, such issues are likely to proliferate. I hope that, year by year, the annual report will offer discussion of these matters.
The Minister very understandably and rightly said in Grand Committee, at col. 53 of Hansard on 18 June that each annual report should not be “a Hargreaves-like review”. But it should be thoughtful and instructive and should be more than a catalogue or parade of BIS or IPO activities, statistics, lists of negotiations and seminars and an account of assistance given to business. It should articulate values and principles and the Government’s vision. I mean the vision of the whole Government, not just the business department but other departments that have a vital interest in intellectual property such as the DCMS, the Department of Health, the schools department and the Department for International Development.
I conclude by noting that the noble Viscount, as Minister for intellectual property, has vastly important responsibilities which go beyond what is written into the clause as we have it now—that is,
“the promotion of innovation and of economic growth”.
The annual report ought to reflect those wider responsibilities and should be the basis of Parliament’s and the public’s continuing consideration of this policy area, which has such wide significance.
Lord Stevenson of Balmacara
My Lords, I would like to pick up on the points made by the noble Lord, Lord Clement-Jones, about metadata. I endorse his feeling that good work is going on in this area in the Copyright Hub, which I think will bridge a gap between where everybody would like to be and where photographers think we are. I think that a number of steps still need to be taken on that but if the Government will keep a close eye on it and help where they can there is a reasonable expectation and hope that we will find something of lasting good coming out of that. As regards the amendment proposed by my noble friend Lord Howarth, he makes his point with great elegance. I look forward to hearing from the Minister.
Viscount Younger of Leckie
The first amendment in this group from my noble friend Lord Clement-Jones would require that the annual report from the Secretary of State to Parliament include specific mention of,
“progress … made in protecting metadata”.
As I said in Committee, this report will have value to the extent that it addresses issues pertinent to the year in which it is published. While some issues such as innovation and growth are bound to endure, other issues may rise and fall in their topicality.
My noble friend Lord Clement-Jones talked about the work being carried out currently by the industry-led Copyright Licensing Steering Group to develop a voluntary code of practice on the handling of metadata. The Government support the voluntary approach being taken by industry to look at this problem, and we welcome the consultation that was published on 27 June. This consultation exercise, which is indeed good news, ends on 28th August, and I would encourage anyone working in this area to contribute their thoughts. I am sure that noble Lords join me in hoping that this work by industry will mean that metadata stripping is not a significant problem in years to come, and as such I hope they will also agree that although it is topical today, it would not be right to require the Secretary of State to report on progress with the issue every year. Of course, that does not mean that the Secretary of State cannot include such information in the annual report at his discretion while it is both topical and of interest. It is fair to say that, for the initial report at least, that will be the case. Accordingly, I am happy to commit today that the first report will contain an assessment of progress made on this issue.
Amendment 14, tabled by the noble Lord, Lord Howarth of Newport, is intended to require the Government to report on how the activities of the IPO impact on the interests of wider society and the economy. The amendment returns us to the debate which we had during Grand Committee on the detail of what should be included in the Secretary of State’s annual report on innovation and growth. Indeed, the noble Lord tabled a similar amendment at that time. In Committee, I explained:
“I entirely agree with what I believe is the principle behind the noble Lord’s amendment, that the wider interests of society are important in the context of IP rights. I can assure the noble Lord that the report will indicate where other policy objectives have been taken into account, alongside economic considerations—for example, where, say, freedom of speech, public health, or international development considerations have taken priority over economic ones”.—[Official Report, 18/6/13; col. GC 51.]
However, as the noble Lord has returned to the issue today, I return to the Hargreaves review to which the report responds. The review stated that the IPO should focus,
“on its central task of ensuring that the UK’s IP system promotes innovation and growth through efficient, contestable markets”.
The intention of the report is to sharpen the focus of the IPO on this core objective. Broadening the scope of the report would reduce its effectiveness in clearly setting out what the IPO is doing to promote innovation and growth.
However, I reassure the noble Lord that the Government take very seriously the need to balance the protection of intellectual property with the promotion of the wider interests of society and the economy, both in the UK and throughout the world. I was delighted to see that international negotiators, including representatives from the IPO, came to an agreement last month on a new treaty to improve access to books for millions of people who are blind, visually impaired or print disabled.
Also last month, the World Trade Organisation Trade-Related Aspects of Intellectual Property Rights Council decided to extend the transition period for least developed countries to comply with the TRIPS agreement until 30 June 2021. This has been government policy since 2011 and is about balancing the potential value of IP policy to least developed countries with the real-life priorities in those countries. The report will include such examples where the interests of wider society have been balanced with economic objectives.
The noble Lord, Lord Howarth of Newport, said that the Government should not rest on the achievements of international agreements. The Government are determined to improve the global IP system so that it benefits the UK and the global economy. I reassure him that we are certainly not resting on our laurels. Whether it is reducing patent backlogs or agreeing transitional periods for least developed countries in TRIPS agreements, we take a global view and seek continuous improvement. In the light of this, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Stevenson of Balmacara
My Lords, the noble Lord, Lord Clement-Jones, has gone through the case originally made in Committee together with the Minister’s response. He has done it in some detail, so I do not want to delay the House going forward further. I should just like to pick up on two points.
It is certainly true that, as the noble Lord said, lookalikes are to a large extent already unlawful in the United Kingdom because they are contrary to a variety of measures introduced by previous Governments—in particular, the Consumer Protection from Unfair Trading Regulations 2008. The point that he made—and I think that it is important—is that these regulations are of little effect if the responsible authorities, such as trading standards, do not have the resources to take action against those breaching the regulations. Therefore, the point that the noble Lord makes, and I support it, is that we need a bit more detail from the Minister when he responds on whether it is true that trading standards are able to deliver on this point.
The noble Lord also mentioned that there was a fine line between confusing packaging on the one hand and the use of generic cues to signal to customers. This was something that the Minister gave us examples of when he spoke in Committee. However, the point here is that, if similar packaging prompts mistaken purchases and creates false assumptions, there must be a sales effect. If there is a sales effect, then it is surely right for the Government either to strengthen the existing powers so that they are effective or to introduce new legislation.
Viscount Younger of Leckie
My Lords, the effect of the amendment put forward by my noble friend Lord Clement-Jones would be to protect the distinctiveness of product packaging. Noble Lords will be aware that the amendment reflects the one tabled by my noble friend Lord Jenkin in Committee, which was mentioned by my noble friend. I thank my noble friend Lord Clement-Jones for his detailed and eloquent introduction to the amendment. Indeed, his and other noble Lords’ contributions in Grand Committee caused me to reflect at some length in the interim. This reflection has reinforced my understanding that the Government are committed to protecting intellectual property.
Like my noble friend, the Government recognise the importance of brands. In recent years the Government have held two brands conferences and established the Brands Industry Forum—a vehicle for brand owners to discuss directly with the Government the policy issues that matter to them. The research on lookalike packaging, which I spoke about when we discussed this issue during Grand Committee, was commissioned by the Government in response to concerns raised by brand owners. This demonstrates that the Government are receptive to the needs of brand owners and willing to explore their concerns. However, we also have a duty to the public and wider economy. It is on this basis that the Government will be resisting the amendment. We consider that it would impact on competition and risk damaging future growth.
I now propose to set out the key issues in more detail. First, as I said during Committee, protection for brands already exists through the IP rights of trade marks and registered designs, and through the tort of passing off. A trade mark is a very powerful monopoly right—the most important identifying feature for any brand. It can last in perpetuity. The first ever trade mark registered in the UK, the Bass red triangle and motif, is still in use nearly 130 years later. If packaging is distinctive, it can be protected as a trade mark.
Secondly, registered design rights protect the appearance of a product if it is novel, has individual character and is not dictated by technical function, which I hope my noble friend agrees would be necessary elements of distinctive packaging. Thirdly, passing off protects one trader’s goods from being represented as those of another. An act of passing off requires existing good will in the goods, a misrepresentation causing confusion as to the origin of the goods and likely damage to the good will from this misrepresentation. These three aspects address the issues that lookalike packaging is suggested to cause, so it is logical that redress is sought through this existing mechanism.
Lord Stevenson of Balmacara
My Lords, despite the points made by the noble Lord, Lord Clement-Jones, Section 73 of the CDPA 1988 is but one component of a complex web of regulations that provides equilibrium in the UK broadcasting market. It is true that Section 73 is relatively old, created when the cable industry was in its infancy. It is also true that the cable industry is in a different position now. I certainly acknowledge that the catch-up TV 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 channels online.
However, the point surely is that this amendment points out the need to look again at the objective of Section 73 and to ask whether the outcomes it delivers today are still relevant to the Government's public policy objectives. 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 let us know what progress is being made in that review and indeed, as has been mentioned, what progress is being made on the communications White Paper, which has been promised on a regular basis since 2010.
While the recent catch-up TV case may 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 platform. The right thing to do is to ensure that this issue will be considered in some detail when the Government eventually publish their communications White Paper. In these circumstances, the amendment proposed by the noble Lord, Lord Clement-Jones, seems somewhat previous, as well as being contrary to consumer interests. I hope that the Government will resist this amendment.
Viscount Younger of Leckie
My Lords, I note the continuing interest that my noble friend Lord Clement-Jones shows in this area. The legislative framework that supports our vibrant and successful TV industry is incredibly important and is deserving of our time and attention. This amendment would repeal Section 73 of the Copyright, Designs and Patents Act 1988. This would remove the copyright exemption for the retransmission by cable of certain public service broadcasts, or PSBs. This issue will be addressed shortly when the Department for Culture, Media and Sport sets out its approach to digital connectivity, content and consumers. I reassure my noble friend that we still anticipate publication of the strategy paper by the end of this month.
This is an area where many competing interests must be balanced. As such, it is of vital importance that the Government proceed carefully, giving each of the opposing views due consideration. I can assure my noble friend that it will be consulted on fully to ensure that the views of all those affected are taken into account. I hope that I might be able to help the development of this debate by setting out some of the key points of discussion and their relationship to key pieces of legislation, including Section 73.
Discussions about Section 73 tend to focus on two key areas. First, they are concerned with the impact on the relationship between PSBs and cable platforms. Secondly, they relate to the use of the Section 73 exemption by internet-based television streaming services. I will look at each of these areas in turn.
This piece of legislation affects the relationship between PSBs and cable platforms by providing cable platforms with an exemption for the retransmission of certain PSBs. This means that PSBs are not able to charge cable services for the inclusion of certain channels on their services. However, this piece of legislation fits within a much wider framework that supports the availability of TV and investment in television programming in the UK. This framework consists of a variety of rules and regulations that affect the production, availability and ease of discovery of public sector programming and its relationship with the services or platforms that carry it. These include the obligations on PSBs to offer their content to all relevant platforms, the rules governing payments by broadcasters for technical platform services, and the powers for regulators to compel these services to carry PSB content.
The Government have been clear that their objective is to ensure that, for the core PSB channels, there is an overall zero balance of payments between the PSBs and the services or platforms, regardless of whether these are based on cable or satellite. This is a fair and pragmatic approach that ensures the wide availability of PSB content and allows PSBs to continue their high level of investment in high-quality UK content. The current framework, including Section 73, is delivering this outcome for TV delivered by cable, and we want to see this continue. However, there is still a way to go before we see net zero fees on satellite, and we want to investigate how net zero fees can be achieved across the main platforms. Therefore, it is right and proper that any proposal will be consulted on with the relevant stakeholders and interested parties.
The second issue at stake is the use of the Section 73 exemption by internet-based television streaming services. This issue is the subject of ongoing legal proceedings and, as such, it is not appropriate for me to comment on the specifics. However, I can say that the Government are concerned about the use of this exemption in this way, and will address it when we set out our approach to connectivity, content and consumers by the end of this month. This proposed amendment to the CDPA would pre-empt the Government’s approach to this area. A complex framework governs the balance of payments between platforms and broadcasters, so we need to consider any changes in the round or risk unintended consequences.
In view of the fact that the Government are actively looking at this matter, I would be grateful if my noble friend would withdraw the amendment. Just before I sit down, I will answer a question raised by my noble friend Lord Clement-Jones and the noble Lord, Lord Stevenson, about when the communications paper will be published. To reiterate, the Government still anticipate that this will be published by the end of July.
Lord Stevenson of Balmacara
Before the Minister really sits down, perhaps he could unpick that a little. “Connectivity, content and consumers” is to be the title of what? Is that a strategy paper, as the noble Viscount mentioned in reply to the noble Lord, Lord Clement-Jones, or is that the White Paper?
Viscount Younger of Leckie
To clarify for the noble Lord, it is indeed the strategy paper, which is due to be published by the end of July.
Lord Clement-Jones
My Lords, 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.
Viscount Younger of Leckie
My Lords, Amendment 18, tabled by my noble friend Lord Clement-Jones, would increase the maximum penalty for online copyright infringement to 10 years. Under the Copyright, Designs and Patents Act—CDPA—the current maximum penalty that can be incurred by online copyright infringement is two years, while for physical copyright infringement, the maximum penalty available is 10 years. This is not a new proposition. A similar recommendation was made by Andrew Gowers in the report he wrote for the previous Government. At the publication of the Gowers report, the previous Government indicated their intention to implement all of its recommendations. However, after a consultation, they decided to increase the financial penalties to £50,000 but left the maximum custodial sentence untouched. I am sure that they did not reach their conclusions on this matter lightly.
This issue is sometimes presented as if there is a gap in the fabric of criminal offences which apply in this area, and that this change will plug that gap. I am not entirely convinced. The statute in question is not the only way in which criminals can be charged for copyright infringement. There is already a range of options for prosecutors looking to obtain a conviction for such activities. Many of these require a lower evidential burden than copyright offences, require less specialist knowledge and offer the sort of sentencing options which my noble friend seeks to add to this offence. Indeed, I am told that prosecutors would usually prefer to charge under the Fraud Act 2006, which carries a maximum penalty of 10 years, or use “conspiracy to defraud”, which also carries a penalty of 10 years. The Fraud Act in particular seems to have met the challenges posed by developments in technology and internet crime, helping industry to report crime as fraud, and has garnered praised from the City of London Police, among others.
There is another issue here of sentence length, by which I mean convictions and sentences actually handed down, rather than those that are theoretically available. The average custodial sentence given for physical copyright infringement under CDPA offences in 2011 was 12.7 months, the highest for five years. So the questions that occur to me are these: is this a necessary change? Is it a useful change to make? I would like to reflect on this matter further, and perhaps have the benefit of views from experts and practitioners in the field. I therefore ask my noble friend if he would be prepared to withdraw his amendment in return for an assurance that I will set in hand a study of this question, the timing of which I will confirm following the Summer Recess. If there is a need for a change to the law then I will, of course, look for a suitable legislative opportunity.
I turn now to the private copying exception, to which Amendment 19 relates. This is a measure that the Government are preparing to introduce under secondary legislation, separate to this Bill, as the noble Lord, Lord Stevenson, pointed out. I remind noble Lords of the lengthy Committee discussions which have already been held on copyright exceptions, and of the detailed information already provided to this House on the Government’s ongoing technical review process. Noble Lords will recall my invitation for contributions to that process from all interested parties. I am very grateful for the contributions we have received to this review process so far. I also remain committed to having further debate on these issues prior to the draft regulations being laid before Parliament. The noble Lord, Lord Stevenson, asked when the exceptions debates might take place and about the timing. I believe that we agreed that the timing would need to be agreed through the usual channels. I would like to await the results of these discussions first before I commit to a particular time.
In light of all this—and I am sorry to strike a rather discordant note—I will admit that I am surprised, and slightly disappointed, to see that my noble friend Lord Clement-Jones has chosen to lay this amendment on private copying, on Report, on one of the proposed changes to copyright exceptions. It is rather late in the day for an amendment that would add a new clause to the IP Bill, and appears to ignore the many opportunities there have been to debate the private copying exception. However, I will endeavour to provide my noble friend with some reassurance in the interim.