Intellectual Property

Jim Dowd Excerpts

Tuesday 7th February 2012 Westminster Hall

[Pete Wishart]

I am grateful to the hon. Gentleman for reminding me of that. I must ensure that I book accommodation for my trip to Salford, which I am looking forward to.

It is worth reminding the Chamber of the contribution that the intellectual property-supported industry makes to the general economy. It is massive. Around 8% of our gross domestic product is predicated on the intellectual property-supported industry, and it is responsible for around 2.8 million jobs. As the hon. Gentleman’s intervention cleverly but not discreetly emphasised, my major interest is music. As well as the fantastic folk awards, the BRIT awards will take place in the next couple of weeks, when we will celebrate again that, outwith the United States, the United Kingdom is the second largest exporter of music worldwide. It is a huge, successful and fantastic industry, which has gone from strength to strength. Last year, we saw incredible success for UK artists, particularly in the US market.

Not just music is involved; every part of the creative range and everything that we do in this country produces a fantastic conveyor belt of imagination and talent, and we have been able to ensure that it has been successful. We have been able to do that mainly because we have fantastic imagination, talent and creativity within the UK. Moreover, we have built up a world-class infrastructure—the sector or the industry—that has been able to ensure that emerging talent has been identified, supported and mentored. We have ensured that that talent has been able to come through, and that is predicated on the real and important issue that those who have been prepared to invest in their talent have been rewarded for their contribution in bringing that talent through.

We must do nothing to threaten that incredible conveyor belt of talent, support and nurturing. However, we are beginning to observe a few danger signs. There are a few clouds on the horizon that are worth examining, because the threat comes from an unusual place. That threat and the clouds in the distance are being brought forward by the Government in the drift of some of their thinking and some of their policies. We must ensure that the industry continues to be supported. I have spoken in such debates for 10 years. I think that I have managed to speak in all debates on intellectual property and creative industries. I have never known a time when those who speak on behalf of the sector and all the different disciplines in the creative economy have felt that they have been undervalued and misunderstood and that their voice is not being heard.

There is a feeling in the sector of being under siege because of the tone and drift of the Government’s thinking about how we look at our creative economy. There is an emerging view that the Government might even be devaluing our whole attitude towards intellectual property. There is a sneaking suspicion—I have heard this from people throughout Europe—that the Government might be approaching something that could be described as anti-copyright. That is not a good place to be. It is not where we want to be if we want to grow this remarkable sector. The Government must hand out an olive branch to those who speak on behalf of the industry and the sector and try to get some of the issues resolved now.

There is also a feeling that that is happening because of the work of the Intellectual Property Office. Its very name suggests that it is about enabling and supporting intellectual property. One would think that that is what it is for, and that that would be its sole and exclusive responsibility. Some of the new thinking about devaluing intellectual property, and the drift and concern about copyright seem to come from within the IPO. We must be wary of that, because we might be creating an office that is supposed to support a particular sector, but instead is becoming a bureaucratic front to devalue the people whom it is supposed to support. We must get to grips with that.

The emerging view is that the Government are more interested in pursuing the rights of those who live off the content of others, and who perhaps abuse it, rather than those who produce it in the first place. That view contends that the artist, the creator and those who are prepared to invest in a talent have become a massive inconvenience and that they are an afterthought and must be grudgingly accommodated and managed. The idea that the inventor or creator is the owner of important intellectual property rights is barely recognised. Whatever links they want to assert must be collectivised for the greater good.

I appeal to the Government to get a grip on the issue, to take charge of it and to prevent the drift because it is not helpful. They must exercise and demonstrate effective political control. They have allowed us to drift over the past few years, and there has not been the leadership that this important sector—8% of GDP—requires. We have a haphazard arrangement, which is not in the interest of the whole sector. The IPO resides in the Department for Business, Innovation and Skills. The creative industries, the artists and the inventors are managed by the Department for Culture, Media and Sport.

We have a Minister who is not accountable to the elected House of Commons; she is a member of the House of Lords. This is my second debate on intellectual property and these issues. I gave evidence to the Select Committee on Business, Innovation and Skills, but I have not even had a meeting with that Minister, such is her accountability to elected Members of Parliament. I respectfully suggest how to resolve the matter. We need one dedicated Minister of State in the Department for Culture, Media and Sport, where we could have the IPO and the artists, creators and the whole sector. Putting the IPO within that Department might lead to better understanding and more sympathy for the people whom it is nominally and notionally there to serve. A Minister of State who oversees the whole digital economy could pick up issues such as intellectual property, supporting artists and major legislation such as the Digital Economy Act 2010.

What we have now is totally unsatisfactory. There is no effective political control, and no leadership is given to the IPO, so it has started to develop its own agenda and come up with the notion that copyright and intellectual property must be constrained for the benefit of users. Close attention at ministerial level has not been paid to such issues over the past few years, and that has created a vacuum that has been occupied—possibly rightly—by the IPO, which has come on board and decided that such matters are its concern. The Minister is relatively new to these issues, but I urge him to get a grip and take control. Government agencies advise; Ministers decide. The Intellectual Property Office may sound like a grand organisation, but it is an instrument of government and should be subject to ministerial control and guidance.

When industries supported by intellectual property rights and those who speak for the sector come to Whitehall to put their case to Ministers, they are dismissed almost arrogantly. Their evidence, which at times the Government have charged them to produce, is dismissed as what Ian Hargreaves called “lobbynomics.” What a ridiculous thing to say to an industry and sector that try to produce work on behalf of the Government so that it is better understood. People are also told, in a patronising and sneering manner, that they do not understand the business environment in which they are working.

Those who now have the Government’s ear are not particularly helpful. Some have become self-serving protectionists and are telling the Government their views. Self-appointed digital rights champions seem to rule the roost when informing Government opinion, and everything that the Government do is predicated on the support for and desire to please massive multi-billion dollar west-coast United States companies such as Google.

I do not know why Google has the Government’s ear, but I do not contend that it has a particular lobbying influence inside No. 10. I do not even suggest that Steve Hilton, the special policy adviser, has a special relationship with Google. I do not suggest such things or contend them today. For some reason, however, Google has the ear of the Government, and it was no surprise that, when Ian Hargreaves initiated his review, many people called it the Google review.

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

If the hon. Gentleman is not prepared to allege such things today, may I volunteer to do it for him?

[Pete Wishart]

I would never suggest that there is a special relationship between No. 10 and certain key individuals in a company called Google, and I am grateful to the hon. Gentleman for reasserting the fact that I do not allege that today.

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[Mark Field (Cities of London and Westminster) (Con)]

I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on securing this important debate. As Members will gather, these issues are close to his heart and, given his interests, perhaps his wallet. As for a parody of MP4, however, I fear that the world is not ready quite yet for a remake of “This is Spinal Tap”, but perhaps the hon. Gentleman has other ideas.

[Jim Dowd]

Is the hon. Gentleman aware that some of us have always thought that MP4 was a parody?

[Mark Field]

I am afraid the hon. Gentleman is bursting the bubble of a man who thought of himself as a serious musician.

I want to put the issue into a broad economic context, before talking specifically about some of the intellectual property issues we have touched on. We rather easily forget that, amid all the west’s gloom and doom, economies across much of Asia, Australasia, south America and Africa are growing at a steady pace, and thank goodness, because where there is growth, there is opportunity. Unlike in the 1930s, when the global economy was shrinking, even the most pessimistic scenarios for economic growth worldwide today suggest that there will be 3.3% growth this year and that growth in 2011 was more than 4%. However, we still lack any overall strategic vision and message regarding the UK’s role in the new world that is unfolding before us. I appreciate that, in the face of such colossal difficulties, it sometimes sounds a little naive to talk just about wide-eyed optimism. All too often, however, the criticism of this country’s entire political class, going back some years, is that it seems almost to be in the business of managing decline, rather than of looking at Britain’s potential.

Over the past decade and a half, roughly three fifths of domestic expansion in the economy has arisen courtesy of the financial services, through the public sector or in the property and construction fields. The present squeeze will, of course, be most profound in those areas, and that will be the case for some time to come. If we discount those key drivers of the last boom, it is understandably difficult to predict with any confidence the precise economic activity in which the necessary supercharged levels of growth will come. We all pay lip service to boosting traditional manufacturing, and indeed new high-tech, high-resolution manufacturing, but we will face great competition in that respect. At the core of this debate, therefore, is what our strategy will be in an area where we continue to maintain a distinct reputation and a great competitive advantage—the export of intellectual property.

Let me take an example from close to home, in my constituency. Like the previous Government, the coalition has pinpointed the creative industries as a sector that offers a great prospect for future growth. Yet, in the two years I have been trying, as patron of Animation UK, to negotiate a tax credit for the animation industry, I have faced intransigence. The televised animation sector may appear to be only a small slice of the national economic cake, but as the hon. Member for Perth and North Perthshire has said, 0.6% here or there makes quite a big difference in the entirety of our GDP. In almost every other nation, however, the animation industry deems the reward of Government subsidy well worth the initial outlay.

British animators are losing work from these shores at an alarming rate because they cannot compete with the lure of Government-backed incentives elsewhere, which make it so much easier to put together the necessary funding packages for programme-making. One local animation business in my constituency, for instance, has recently taken calls at ministerial level from the Governments of Trinidad and Tobago and South Africa, advising it of the carrots on offer if it moved to those jurisdictions. In the case of South Africa, the carrots included free office space for three years and the waiving of particular local taxes.

It is fair to say that our DCMS team understands the problem, but over the past two years, the Treasury has seen only the up-front cost, rather than the longer-term, revenue-positive outlook. I do not blame the Treasury, given the problems with film benefits unravelling almost year by year. There must also be a sense that we need to think about not only the volume of product, but the quality. I also understand that the financial constraints we are under mean it is difficult to make the case for any tax breaks. Most critically, however, we seem to be ignoring an issue that explains why I, as a believer in free and open markets, support a targeted tax credit. Naturally, it would be good if a tax credit helped to keep animation jobs on these shores, but the real golden egg is the retention in this country of intellectual property rights.

The money generated annually worldwide from unimaginably successful franchises such as “Thomas the Tank Engine”, “Wallace and Gromit” and “Peppa Pig”, especially when it comes to all the secondary branded products, massively exceeds that brought in by high-profile films such “The King’s Speech”—a massive Oscar winner last year, which was, of course, helped along by the tax credit for films. To give some perspective, “Thomas the Tank Engine” tots up worldwide sales in excess of £1 billion every year, with his tales broadcast to more than 1 billion households in 185 countries each and every day. By contrast, “The King’s Speech”, which was hailed as the most successful British independent film ever, grossed just shy of £374 million, and that was essentially a one-off payment.

The issue is similar for the video games industry, which seeks comparable tax incentives to keep business on these shores. In addition to offering the revenue benefits that I have cited, the video games and animation industries are young industries. That is an ever more crucial factor at a time of rising youth unemployment. We need to give our brightest and best a reason to stay in this country. It is no good just offering them specialised creative university courses when the only jobs in the relevant industries are abroad.

Instead of tinkering temporarily with little pots of money here and there to boost shrinking sectors, it is time we started thinking more strategically about how we can—not just via the tax system—promote the sectors of our economy that offer potential growth. I entirely endorse what the hon. Gentleman said: intellectual property is one of the relatively few areas where we hold an historical advantage, and the market for many of our creative industries—partly because of the strength of the English language—is in the fast-growing territories outside the area of the north Atlantic economic downturn.

I want to end with a couple of important warnings for the future, which are slightly more general than my observations about particular industries in my constituency. First, there is no room for complacency about the west’s domination, as we see it, of the knowledge economy. Within the next 20 years, and perhaps rather sooner, I suspect that the IP rights that have underpinned the west’s competitive advantage—whether licensing, copyright or patents—will be due for a radical, philosophical shake-up. For example, an ever more assertive China will argue that traditional IP structures are no more than the west’s attempt to impose its own form of protectionism to suit its particular demographic. We cannot assume that the dominance of our values in determining global trade will remain unchecked. We should look out for China putting forward a more forceful argument along those lines during what might be increasingly fraught World Trade Organisation negotiations in the years ahead. With so many of our Government bonds being mopped up by sovereign wealth funds from the east, our bargaining hand may prove much weaker in the face of that apparent logic. We should look out, too, for the terms of Chinese investment in our companies. Alas, that is nothing new, but I suspect requests for technology transfer will be written into more and more deals as the price for eastern funding.

Finally, I want to highlight a concern that has been in my mind as a result of my work as a member of the Intelligence and Security Committee. Malicious cyber-activity requires much greater vigilance. Such activity can take the form of online fraud, espionage or terrorism, but of relevance to this debate are the ongoing and daily attempts to steal British-owned intellectual property—patents, ideas and designs. This occurs most obviously, but by no means exclusively, in the IT, technology, defence, engineering and energy sectors, and it is of course carried out primarily to gain competitive commercial advantage. Such attempts, I fear, are commonplace, and we must do all we can to educate businesses about the substantial risks that lie ahead.

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[Eric Joyce (Falkirk) (Lab)]

I have some brief remarks. I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on his speech, much of which I agreed with, and some of which I did not. The hon. Member for Cities of London and Westminster (Mark Field) made an important and powerful point about China and the implications for the way business is done. That is not to say that we must yield to the way business is done in China and places like it, but that is an important part of the way things are done across the world. The market is huge, and that will unquestionably have implications for the way we do business, for copyright and for many business practices. We must accept that the way business is done elsewhere has implications for the creative industries. Sometimes we are slow to recognise that.

I agree with all hon. Members who have spoken that the importance of creative industries and intellectual property is enormous. The Publishers Association, the Authors Licensing and Collecting Society and others have produced some good briefs. However, I want to make a few counter-comments. There is a general trend in debates such as this to laud the importance of intellectual property, and, sometimes—as at the beginning of the speech of the hon. Member for Perth and North Perthshire—to see the counter-argument as a matter of big bad Google lobbying No. 10 in a somehow illegitimate way. I have no idea what the hon. Gentleman is referring to in saying that kind of stuff about special contacts inside Downing street.

[Jim Dowd]

I shall try to speak about this later if I catch Mr Caton’s eye, but the issue is not the fact that anyone has access to No. 10, because everyone should be able to have input into the political system; the fear is of the disproportionate influence that some people have.

[Eric Joyce]

I hear what my hon. Friend says, but in debates about intellectual property and copyright, as we have seen today—with one exception, on the matter of parody—the traffic all goes one way. It is quite easy to understand the importance of copyright, intellectual property and the creative industries. Conversely, it is easy to label people who copy things without paying for them as pirates and say they are committing illegal acts. However, without lauding that, it is a fact that the internet is a fantastic copying machine, and that is what happens. If we want to criminalise everyone who does it, we are on a hiding to nothing. We are criminalising everyone’s children to start with.

People sometimes say, “It’s exactly the same as theft. People download a record track and don’t pay for it. That is money that the industry forgoes.” That is a highly debatable and questionable proposition. Frequently, people want their stuff to be spread around the place and be copied, because it encourages other revenue streams.

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

Mr Caton, I will meet your requirement—indeed will attempt to exceed it, by finishing before then. I am sure everybody would like to hear from the Front-Bench speakers, particularly the Minister in his first outing in this guise. I am sure he wants to practise his skills in this area.

I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on initiating the debate. He has a well-deserved reputation in the House for his attention to these matters, and his encyclopaedic knowledge of them. It is a great opportunity for the rest of us. Since the last debate we had in Westminster Hall on the matter, things have changed somewhat. As far as I can recall, my hon. Friend the Member for Falkirk (Eric Joyce) sat here and I sat there. Beyond that, the arguments seem to be running in very similar fashion.

It is fitting that we should have this debate today, as it is the 200th anniversary of the birth of Charles Dickens, one of the most prolific, creative and productive writers of 19th-century Victorian Britain, who had quite a few struggles himself over the rights to his own material in the days when ideas about copyright were somewhat primitive, to put it mildly.

I say to the hon. Member for Cities of London and Westminster (Mark Field) that, as others have echoed, China’s attitude to intellectual property, patents and copyright is changing, I believe, although it is different from our own. I remember many years ago—I think I am probably the oldest person in the room—that under the first Wilson Government, de Havilland, as it then was, sold two Trident aircraft to the Chinese Government. For those of shorter memory, Britain used to make quite a few aircraft on its own in the 1960s. It sold two Tridents and said it was the great breakthrough into the far east, China and the burgeoning Chinese market. However, the Chinese used one for training crews and dismantled the other one to replicate it. At that time their internal airlines were totally crude: I think they were called The East is Red airline or something. They produced an aircraft that bore an astonishing similarity to the Trident, and de Havilland never sold an extra single plane to them. There are different views about copyright in the world.

Others have mentioned the importance of creative industries to Britain in particular and the knowledge-based economy we are in. It is not only innovation and creativity in the arts and literature that we have to encourage. Even though we have a declining manufacturing base, it is more productive than ever, and we need innovation and adaptation in the field of manufacture as much as anywhere else. Governments have to construct and encourage an environment that nurtures and rewards originality and innovation.

The Intellectual Property Office, as the hon. Member for Perth and North Perthshire mentioned, seems to have one particular idea of its role in trying to do that. However, it is not just about that. I have a document saying that its view is:

“Copyright should only limit the use of creative works to the extent necessary for it to fulfil its central objective—the provision of incentives to creators.”

It is not just an incentive, that is true, but it is a reward for effort, for work done. This makes it sounds as though it is doing them a favour by offering them something. I do accept from my hon. Friend the Member for Falkirk that there is undeniably a consumer interest. The whole matter does not revolve solely around the consumer or the producer. The challenge for any Government is to work out where the best balance lies. One might say that is the essence of politics—working out where the balance lies on an issue. There are benefits.

However, I want to pick up what my hon. Friend the Member for Falkirk said about the almost anarchic nature of the internet and web. It is not just that it is difficult, which is true. Some people feel that we are being lulled into a position where people say that nothing can be done, and therefore do not even try. That is not true. On the matter of illegal sites, I read yesterday about a site whose name I cannot immediately remember—my hon. Friend the Member for Cardiff West (Kevin Brennan) can probably Google it while I am talking. NewBiz, an illegal download site, has been taken off the BT ISP and just this week Sky announced it is doing that. I accept what my hon. Friend the Member for Falkirk says: one is chasing one’s tail in many respects. However, just because one cannot do everything does not mean one does not do anything. One makes the effort one can. There must be a reward for behaving properly, just as there must be a penalty for behaving badly or, in some cases, criminally.

I want to spend a couple of minutes referring to an issue raised by the hon. Member for Perth and North Perthshire and the right hon. Member for Bath (Mr Foster), who is no longer in his place. That is the matter of the IPO’s exercise of extending copyright exceptions for educational use. That has certainly caused a lot of concern and dismay in various parts of the creative community, because of the thrust of the consultation. I know the consultation is open until the middle of March and is still trying to amass information. The policy options outlined start with option zero, which is to do nothing, followed by:

“Option 1: Expand the types of works covered by education exceptions…Option 2: Increase the proportion of a copyright work that can be copied under the education exceptions. Option 3: Expand the definition of current education exceptions to enable distance learners to access educational materials over secure networks. Option 4: Widen the definition of an ‘educational establishment’. Option 5: Remove the ability of licensing arrangements to restrict the use of exceptions.”

That is the one we discussed earlier and essentially ignores the rights of all copyright holders and says it is for the benefit of educational establishments. The tone of the document is very much slanted to that option. In fact, in the evidence base, it says that that is the option closest to Government policy. That in particular is what is disturbing writers.

I confess an interest—not a pecuniary or financial one, but because it is a matter that interests me. I am an officer of the all-party parliamentary intellectual property group and of the all-party parliamentary writers group, and this matter is important to writers.

Having set out the options, the document states at the end:

“We do not have a preferred option at this stage (see page 22 for reason why).”

Everything in the evidence base shows that that is where it is pushing the consultation, to make it more liberal, almost to the point where it is a free-for-all. What worries a lot of writers and those in the community is that there is no clear indication as to where the pressure has come from to undertake the review and to undermine the position of the Copyright Licensing Agency and the Educational Recording Agency. There is no indication why it is being undertaken. There is no information stating that the current system, as it is operating, is not satisfactory. Nobody, no identifiable educational institution, nobody operating in that field has come forward and said that this is a major encumbrance to using whiteboards or other material that we need for our studies.

Where has the impetus for this come from, other than a desire for deregulation? That may be a useful thing in some circumstances, but when it becomes the object of the policy, it needs to be examined. It is a good servant but a poor master. That is where I tend to agree more with the hon. Member for Perth and North Perthshire, that this is what the IPO thinks the Department for Business, Innovation and Skills now wants to hear. I am sure the organisation’s being in Newport is a major benefit but has nothing to do with it. The fact is that there is little or no political control apparent.

I tabled a few parliamentary questions about how the report was compiled and, in particular, the impact assessment. I received a reply that the impact assessment had been

“prepared…using publicly available data, including evidence provided to the Intellectual Property Office by interested parties.”—[Official Report, 30 January 2012; Vol. 539, c. 459W.]

In the evidence base, it states that evidence is being called for as part of the assessment of which option to follow, so it looks as if someone got the inside track. I will not suggest who that might be; I have no evidence. All I am saying is that the exercise should be concluded as rapidly as possible, with the minimum possible change required, because otherwise the destabilisation of those writing for the educational community will be complete.

I abide by your exhortation, Mr Caton, and leave my remarks there.