Intellectual Property (Hargreaves Report)

Jim Dowd Excerpts

Thursday 7th July 2011 Westminster Hall

[Pete Wishart]

I have seen the early-day motion to which I think the right hon. Gentleman is referring; it was kicking around just now. I have certainly received correspondence on the issue. That seems to be one of the great misconceptions about the DEA. People are always referring to disconnection, but nowhere in the DEA is there any mention of disconnection. If any technical measure were to be enforced, as he knows, numerous measures would have to be agreed by Government and Ofcom before anything like that could be considered. What would happen is that people would receive a polite letter asking them to stop taking music for nothing and directing them towards legal sites. I am glad that he mentioned the subject.

[Jim Dowd (Lewisham West and Penge) (Lab)]

Before the hon. Gentleman moves away from the point about illegal downloading, has he seen today’s BBC report showing that the problem not only persists but continues to grow year on year? Does he agree that regardless of all the sophisticated arguments that can be advanced, it is nothing short of theft?

[Pete Wishart]

I did see the BBC piece. It was done for “Newsbeat”, and it showed the effect of illegal downloading on the film industry. It is not just film studios but people who work in the film industry—carpenters, caterers and all the other ancillary staff—who are taking a direct hit to their ability to earn a living working in the creative industry. The piece was a great example of the impact on the creative industries of the scourge of illegal downloading, and it shows why the Government must get their finger out and start dealing with the problem, using the measures agreed in the DEA.

When will the Government’s response be published? We were promised a response before the recess, which is now only 10 short days away. I presume that we will not get a response to the Hargreaves report before the recess, so when will it be published? What is it likely to include? Will the Government ensure that a thorough cost-benefit analysis is undertaken by whomever they appoint to study the issue? Will they ensure that existing activity is properly assessed? How will the Government ensure that IP laws remain protected in the light of changes to consumer law and the proposed organisational change to consumer protection?

If we want a successful and vibrant creative sector, IP has to be respected and valued, and not seen as something that people have the right to access for free just because technology enables them to do so. We cannot continue to give away our great recorded works for nothing, threaten our film industry, compromise our publishing houses, and leave our artists and creators without reward and protection, just so that some people can illegally take their work for nothing. Our creative industry is one of the most dynamic parts of the economy and the provider of hundreds of thousands of jobs. We have not done too badly so far with our IP and copyright laws, and nothing must be done to compromise our success and creativity. The Government have it in their power to ensure that the UK can become the world hub for creative industries. It is now time to stop the reviews and get on with the work.

[Mr Don Foster (Bath) (LD)]

I am delighted to follow the hon. Member for Perth and North Perthshire (Pete Wishart), who made an excellent speech. I agree with nearly everything that he has said. He rightly began by talking about the importance of the creative industries. Many of us believe that, given the right support and the right environment, they could become as important in this country as financial services are at present. It is critical that we give them the right support and the right environment. That is the climate in which the Prime Minister made remarks that led, in due course, to the Hargreaves report. I share some of the hon. Gentleman’s concern about the language used by the Prime Minister at the time and about the thought that we may end up going down the American fair-use route, which he has described. I want to clearly state on the record that I am very pleased that the Hargreaves report did not conclude that we should take the American fair-use approach.

I also join the hon. Gentleman in agreeing with one critical thing that appears at the beginning of the Hargreaves report, namely the importance of making decisions on the basis of clear evidence. Although I am the first to admit that the evidence is mixed on some of the issues, such as the impact of piracy on the creative industries, I nevertheless believe that the report goes too far when it dismisses some of the information, data and research—it calls them “lobbynomics”—from the industry. The one thing that I think we can learn from that is that getting this information right is really important. I am therefore delighted that discussions are now taking place between the UK Intellectual Property Office and the creative industry sector about the basis of research methodology and the presentation of data. That will help us all in making judgments about how we progress.

Notwithstanding the Hargreaves report’s perhaps overly critical view of the degree of concern about issues such as piracy, I am pleased that it recognises that there is a problem and that we have to address it. I am delighted that the three things it says that we need to do are enforcement, education and the development of new business models, and I accept that those are the three key things that we need to do. On enforcement, it is important that hon. Members acknowledge that, unless we are prepared to recognise the importance of the intellectual property rights of creators, we can never be said to be supportive of the creative industries. It is therefore vital that we find ways of ensuring that we provide much-needed protection in those areas.

During his excellent contribution, the hon. Gentleman said that the Government need to get on with the measures in the Digital Economy Act 2010. I do not fundamentally disagree with him, but it is important that we are aware that a number of problems must be addressed, particularly in relation to the use of illegal websites. During the passage of the 2010 Act through Parliament, I made clear—the hon. Gentleman was present in the House at the time—my concern that sections 17 and 18, which deal with those issues, are unworkable. Although we have not yet seen the report, I understand that Ofcom has looked at the matter and reached a similar conclusion. Therefore, if we are to move ahead, we will have to find other ways to address illegal activity on the internet. I know that productive discussions are taking place between the industry and internet service providers to find a way forward. I welcome those discussions and hope that they will be fruitful. We will also have a look at a number of other measures coming out of Europe, which might also inform our decision.

The hon. Gentleman has rightly referred to peer-to-peer file sharing. It is crucial that every hon. Member is clear that the 2010 Act gives ample opportunity for further discussion, research and debate before any of the actions about which some people are concerned—the so-called technical measures—take place. The legislation already enables us to do that, so I hope that we will be able to implement and progress with those measures as quickly as possible.

I said earlier that Hargreaves said that we also need to address education, which is critical. Far too many people in this country simply do not understand the damage that they are doing to the creative industries by obtaining the intellectual property of other people without making any contribution towards it. If we cannot have a situation in which people are creating material and being rewarded for it, the creative industry simply cannot grow, which is the key thing that the Hargreaves report is concerned about. It is critical that we recognise that and educate people so that they understand that they could be damaging the very creators of whom they are supportive and whose works they enjoy.

The third issue is the development of new business models. I agree entirely with the Hargreaves report that that is important, but it ought to be placed on the record that the picture is nowhere near as gloomy as the report perhaps suggests. For instance, while I acknowledge that it made a very slow start, the music industry has got its act together, and the UK now has 72 different business models for people to easily and cheaply access the music that they are keen to hear. It is already further ahead of the game than the rest of the country in that respect. Other parts of the industry—the film industry, computer games and others—have to try to improve what they are doing. I broadly support what the Hargreaves report says about enforcement, education and the development of new business models. I also broadly support the hon. Gentleman in saying that we need to get on and address those issues as quickly as possible.

One of the kernel ideas in the Hargreaves report is, as the hon. Gentleman has said, the digital exchange. I accept the hon. Gentleman’s argument that it is an exciting idea and that it offers the opportunity to improve the growth of the creative industries. He was right to say, however, that many problems still need to be addressed. First, I am concerned about the use of the word “exchange,” which is why I intervened on him. I do not believe that we are anywhere near developing all the things that we need even to think about having a single port of call where business is transacted. We ought to be looking much more at helping each sector of the creative industry—video games, film, books, magazine publishing, the music industry and so on—to ensure that they are developing their systems, but in such a way that they can work together to develop interoperability.

The music industry is advanced in its thinking on this. Not only is it well advanced in the UK, but it is working with colleagues throughout the rest of Europe. Collectively, they are pulling together the sort of database that Hargreaves talks about. I hope that the industry will be willing to share its data sets with other sectors of the industry, so that we can find some commonality. Commonality is absolutely vital, even simply on the number labelling of an item. Let us imagine a bit of film for which there is some music and a script, and where stills and bits of other people’s films have been used. All those things need different access, but they all need to be coded in the same way, so that we know where they all come from. We need to work at interoperability.

If we acknowledge that different parts of the sector are developing their own databases and their own licensing systems—in some cases, they have had such systems for a long time—it seems somewhat perverse to suggest that we might get rid of all that. As a first step at least, I would prefer the exchange—or whatever it might be called—to be a front page or a signpost to ways of finding this material and establishing how people can get a licence for the use of it for commercial purposes.

We must then address the issue of the digital champion. I apologise to the author if I have got this wrong, but the report seems to be saying, on the one hand, that finding a digital champion should be industry led and, on the other hand, that the Government should appoint someone to do it. That does not mesh together very well. Initially, someone should do a scoping exercise of what is needed. We should consider using somebody who is, for example, a project manager and who gets the support of all sectors of the industry. We could do that very quickly, which would deal with the issue raised by the hon. Member for Perth and North Perthshire about getting on with things. I urge the Minister to consider whether that could be a way forward.

[Jim Dowd]

On that aspect, the report uses the precise expression “a highly respected figure” in the industry. I am not sure that that takes us much further forward in defining how respected they are and by whom.

[Mr Foster]

That is why there are so many problems. The hon. Gentleman is right to raise his concern about the matter. We need to find a way of making progress. I am suggesting that if we can downgrade the issue of what we are looking for and be clear about the job spec, it might be easier for the industry to come together and find a way of doing it.

Finally, on the digital copyright exchange, I agree with the hon. Member for Perth and North Perthshire about its being voluntary. It seems totally wrong to suggest that if I am the creator of something—a piece of music, a film, a book or whatever it might be—I should be automatically forced to place my work on that particular platform. That is not the sort of liberal society in which I want to live. It would also be totally wrong to have a situation whereby if I do not put my piece of work on to the exchange, I will somehow be exempted from access to the law that applies to everybody else. After all, if somebody nicks my work, they should be punished for it and the full force of the law should apply, whether or not I have chosen to put my work on a particular exchange.

The hon. Gentleman also mentioned the important matter of orphan works. Sadly, clause 43 of the Digital Economy Act 2010, which covered those issues, was ditched at the last minute during the wash-up at the end of the previous Parliament. I am concerned about what the Hargreaves report suggests is a possible way forward. In effect, the report says that we should allow an orphan work, of which the creator is unknown, to be licensed and used by somebody in a commercial or possibly a non-commercial venture for a nominal fee. The problem with that is twofold. First, someone has to do some level of due diligence to get that licence and demonstrate that they have tried to find the author. However, I am sure that they will not go any further than they need to if all they have to do is pay a nominal fee. A nominal fee does not provide any additional money to do more diligent searches to try to identify the author or creator of the work.

The second problem is that if by chance a particular piece of work of which the creator is unknown suddenly becomes a worldwide best seller and generates vast sums of money for the person or organisation that obtained the licence, surely we must have a system in place whereby the creator, if identified, has the opportunity to benefit from that worldwide success. The report does not cover real issues that we must address adequately.

I know that other hon. Members want to contribute, so I will briefly make one final point about exceptions. Again, there are real issues surrounding the sort of exceptions proposed in the Hargreaves review. I shall talk about the exception in relation to parody as an example. We all enjoy a parody of something. However, the truth is that if someone takes something, parodies it and achieves an enormous commercial success, that parody is based on somebody’s creation. I am absolutely convinced that the person whose creation has led to the commercially successful parody must be able to benefit from it. The creator must also be able to say that they are unhappy with their work being used in that particular way. We must consider the issue of exceptions more closely and in more detail. That applies to the use of material and so on. There will no doubt be an opportunity for consultation once the Government come forward with their response to the Hargreaves report.

The Hargreaves report mentions many other issues, which I am sure other hon. Members will cover. I may have seemed critical of the report, so I will end by saying that it was important to have such a report to kick-start the debate. What matters is how that debate develops and the action that the Government take. I hope such action will support the creators, who are so critical to our creative industries.

[Jim Dowd (Lewisham West and Penge) (Lab)]

I believe that this is the first time I have served under your sagacious direction, Mr Chope, and I am delighted to do so. I was also delighted to support the hon. Member for Perth and North Perthshire (Pete Wishart) in his application for the debate, and I am pleased that Mr Speaker saw fit to grant it. The hon. Gentleman has been a true champion of creators, authors and performers for many years. He brings not just enthusiasm to the issue, but a detailed personal knowledge.

I agree with the hon. Gentleman strongly. We have seen a number of such reports over time, and this is the latest in a long line of them. The most recent was the Gowers report in November 2006. He said that he hoped that the Government would adopt the entirety of the report in some form or that they would at least respond to it. I will be surprised if they do, because my experience is that that is not what happens. My experience has shown that things move ahead incrementally by a percentage each time and that, the next time a report is written, we are still dealing with many of the older issues while trying to address the newer ones.

I welcome this report, however, because the issue is critical for the country and for the industry. It was published just before the end of May. At almost the same time, the EU directive on orphan works was introduced, to which the Government will clearly have to respond. I imagine that the one will inform the other in the fullness of time. Like other hon. Members who have spoken, I am interested to know when the Government intend to produce their proposals, but I accept that it is better to get the matter right than to deal with it quickly. The issue is so important that we should be prepared to take such an approach.

Like the right hon. Member for Bath (Mr Foster), I shall outline a few items without going through the whole report. I broadly welcome the report’s thrust because it addresses a number of significant issues. In November 2006, the foreword to the Gowers report stated:

“For many citizens, Intellectual Property…is an obscure and distant domain—its laws shrouded in jargon and technical mystery, its applications relevant only to a specialist audience. And yet IP is everywhere. Even a simple coffee jar relies on a range of IP rights—from patents to copyright, designs to trade marks.”

Hargreaves has addressed that issue, and he recognises its significance not only for UK plc, but for many of our citizens who are involved in the creative industries.

I welcome the thrust of the report and its concentration on not only copyright, but patents, designs and other, broader issues with a relevance to IP rights. As the hon. Member for Perth and North Perthshire said, adopting all the elements of the report could be worth about £750 million to our GDP. I strongly doubt that they will all be adopted, but even the adoption of a significant number of them will have a significant benefit if they have the effect envisaged.

Both the hon. Member for Perth and North Perthshire and the right hon. Member for Bath mentioned the digital copyright exchange, which deserves to be applauded for one reason above all others: it is at least an attempt to look at a new way of doing things and to look forward. Far too many reports and too much Government legislation fight the last war, not the next one, but the report is an attempt, albeit a faltering one, to move matters forward. However, some groups in the creative industries have told me that the digital copyright exchange was not necessary and that current market mechanisms adequately deal with some of the problems that the report describes. Their fear is that the net effect would simply be to add a not inconsiderable amount to current transaction costs without an appropriate benefit.

The exchange proposal is a response to complaints made during the report’s compilation that the complexity of navigating rights clearance processes is a barrier to innovation and growth, notably for new-tech and start-up organisations. There is a problem in that respect, but the digital exchange proposals are perhaps somewhat heavy-handed and bureaucratic, and I would need some convincing that they could be effective.

The report says that the long-term aim is to create

“the best…licensing system in the world”,

and who on earth would disagree with that? I doubt whether anybody here today would say that we should have only the second-best or third-best system. The objective must be to have the best regulatory regime, which balances the rights and responsibilities of those who are involved. I doubt whether the digital copyright exchange is the mechanism to do that, but it at least addresses the future, without necessarily being future-proof.

On digital libraries, there is a proposal to use the system that is broadly in existence and to adopt the extended collective licensing model that exists, with varying success, in other parts of Europe. In effect, that would extend the licence granted by a licensing body for certain works to include copyright owners of the same class of works who are not members of that body, provided that the body represented the majority of copyright owners for that sector, and subject to the right of non-members to withdraw from the scheme. An assurance on that last point would be most welcome. That is a reasonable way to make progress.

Clearly, any modification of current copyright principles that creates new rules for a particular designation of work needs to be examined most carefully. One of the key elements of a workable system, particularly for orphan works, is a robust system of diligent search, rather as the right hon. Member for Bath said, to avoid any prejudice to authors or rights owners. We must better understand what that due diligence is, how it is to be implemented and what it looks like to ensure that orphan works can be dealt with fairly and without the risk of losing the opportunity that they provide.

I broadly welcome a number of the other recommendations on copyright exceptions. The hon. Member for Perth and North Perthshire and the right hon. Member for Bath were critical of the US fair-use law, and the great fear that we all had as Hargreaves was unfolding was that that is what we would wind up with. The report correctly identified two broad problems with the operation of the current copyright exceptions regime: first, the failure to remove barriers to innovation and, secondly, a discrepancy between the law and most people’s reasonable expectations and behaviour in the light of the rapidly expanding development of new digital services. I am glad, however, that the report rejected the fair-use approach adopted in the US, because there are, as it notes, legal and political impediments to imposing such a regime in the UK. Instead, it outlines a series of new exceptions to achieve specific goals, and that is the right way to approach personal use, parody, data mining and what are termed “Gowers exceptions”.

I welcome the recommendation to promote greater uniformity in the operation of collective management organisations. The report proposes that such organisations adopt codes of practice, which should be approved by the IPO, and I very much welcome that. The other issues that were addressed include enforcement, the awareness of rights, piracy, an IPO review and the next steps in the progress of the report.

I therefore welcome much of the report, although I have reservations about parts of it. It builds on the steps that were partly adopted in the wake of Gowers. The foreword to Gowers stated:

“In the modern world, knowledge capital, more than physical capital, drives the UK economy. Against the backdrop of the increasing importance of ideas, IP rights, which protect their value, are more vital than ever.”

As we move from a manufacturing-based economy to what some people call a knowledge-based economy, the protection of IP rights becomes more important than ever if we are to ensure that rights holders receive adequate reward for their activities and that we have an environment conducive to originality and innovation.

--- Later in debate ---

[Mr Hayes]

That is very generous of the hon. Gentleman.

[Jim Dowd]

As there is a spare slot for an intervention, can I ask whether the protocol for orphaned works will include a description of due diligence, if the Minister follows such a path?

[Mr Hayes]

That is another interesting point. Again, that will form part of what we say when we respond to the report. The review did not deal with the subject in the detail that the hon. Gentleman refers to. The review recommendations do not come to a definitive conclusion on that subject, as he will know from having read them, but the proposal seems to be a useful addition to those recommendations and is certainly something that we will cover in our response. I am more than happy to give him that assurance.