Intellectual Property Bill [Lords]

John Leech Excerpts

Monday 20th January 2014 Commons Chamber

[Mr John Leech (Manchester, Withington) (LD)]

I am delighted to have the opportunity to speak briefly on Second Reading this afternoon. Given the enormous contribution of the creative industries to the economy and growth of the UK, the Bill is long overdue. The design industry is worth £33.5 billion or 2.2% of gross domestic product, employing some 350,000 people in the UK.

A recent survey of designers found that 59% had suffered from design copying, but only 32% took a case to court. Copyright infringement costs £775 million every year—5% of the total value of UK design investment—while global patent processing delays cost £7.6 billion annually. We must not forget that intellectual property is not important only to the big multinationals, major record labels or Hollywood studios; it is vital, too, for hundreds of thousands of small, medium and even micro-businesses delivering jobs and growth in every region of the UK.

The Bill seeks to introduce some changes in the field of patents and design law, something that we should warmly welcome. Clause 13 introduces a new criminal offence of intentional infringement of a registered design, bringing the law into line with copyright and trademarks. Unfortunately, although this is a welcome move, the vast majority of designers, many of whom are individuals or micro-businesses, rely on unregistered rights, as several hon. Members have said. Approximately 4,000 designs are registered each year with the Intellectual Property Office, while between 18,000 and 25,000 unregistered designs were lodged on the ACID—anti-copying in design—data bank last year, yet there are only 1,100 members. The vast majority of designers rely on unregistered rights, so if we really want to make this legislation effective, it should be amended to cover unregistered, as well as registered, rights.

I support clause 21, which introduces a duty on the Secretary of State to report annually on how the activities of the Intellectual Property Office have supported innovation and growth in the UK. This is a welcome improvement, but amendments were introduced in the other place to try to ensure that it is a genuinely effective provision in the interests of the traditional creative sector. I seek reassurances from the Minister that consideration will be given to bringing forward similar amendments in Committee to address those concerns.

It is disappointing that the Government have missed an opportunity to tackle a number of other issues around intellectual property, which the other place highlighted, that could helpfully be remedied through the Bill. These issues would benefit from further discussion and examination as the Bill progresses through the Commons.

First, the Bill should increase the maximum penalty for digital copyright theft to bring it into line with the available maximum penalty for physical copyright theft. Criminal offences for online copyright theft have a maximum penalty of two years’ imprisonment. Criminal offences for physical copyright theft have a maximum penalty of 10 years’ imprisonment. This discrepancy has existed since 2003, when new online offences were introduced via secondary legislation as part of the UK’s implementation of the copyright directive, using the European Communities Act 1972. The recent Culture, Media and Sport Select Committee report recognised that that inconsistency needed to be addressed, and the Minister in the other place agreed to have another look at it.

[Martin Horwood (Cheltenham) (LD)]

I strongly support what my hon. Friend is saying about the importance of the digital realm. Publishers like Edward Elgar Publishing in my constituency, which is successfully shifting its publishing increasingly into digital format, feel that the whole issue of digital piracy needs to be tackled. Does my hon. Friend agree that it needs to be tackled on an international basis, and that tackling only the domestic situation is only half the battle?

--- Later in debate ---

[Mr Leech]

I agree with my hon. Friend that we need an international, as well as a national, dimension.

The discrepancy I mentioned is a source of great frustration. For example, the private prosecution by the Federation Against Copyright Theft of Anton Vickerman, who was making £50,000 a month from running a website that facilitated mass-scale copyright infringement, saw him convicted of conspiracy to defraud and sentenced to four years in prison. This level of sentence would not have been possible if he had been prosecuted under copyright law, but FACT was able to prove conspiracy in his actions. Without proof of conspiracy, a serious criminal could have been left subject to a disproportionately low maximum penalty.

This is not about introducing a new criminal offence, but simply about addressing a discrepancy in the levels of penalty available for existing offences. The current position causes problems for prosecutors, to whom the full package of legislative options should be available so that they can consider each case individually and use the legislation that will produce the best results. Equally important is the fact that the discrepancy sends the wrong message to infringers, and to the public, about the level of seriousness of the crime.

The Bill also fails to deal with the ongoing problem of parasitic packaging. Businesses and consumers need more protection against copycat packaging of goods or services. Packaging consumer products to mimic familiar branded products free rides off investment in brand reputation, misleads consumers, and distorts competition. A report published by the Intellectual Property Office in April showed that nearly 60% of those surveyed had mistakenly purchased a copycat product on at least one occasion. Moreover, the copy hijacks the reputation of the brand, which has often been built up over years of consumer experience and investment in innovation and product performance. The copy bears none of the cost of building that reputation, while benefiting from higher sales and “assumed” reputation and quality.

The current legislation, including legislation on passing off, clearly does not work. An amendment, through the Bill, would clarify the law, allowing consumers to make clear decisions about the products that they are using while protecting the vast amounts that businesses invest in creating, marketing and protecting their brands.

The Bill would be improved by the introduction of a number of simple measures to ensure that intellectual property is better protected online, rights can be enforced, and owners and consumers can be adequately protected from criminal activity. Those measures should ensure that the likes of eBay and social media platforms have robust and effective processes in place to prevent illegal traders from selling on their platforms and to ensure that, once discovered, such traders cannot register under a different name and continue their illegal activity.

The Bill should include measures to compel domain registries to carry out effective verification and validation of all their registrants’ contact details, so that they can be traced for the purpose of serving legal notices or warnings. It should also include measures requiring businesses such as Google to take all reasonable steps not to promote or support sites where they have reasonable knowledge of infringement of copyright, and requiring businesses to have an obligation not to trade with or promote sites where they have actual knowledge of infringement.

[Mr Sutcliffe]

I hope that we can say more later about the role of Google and the way in which it investigates, or rather does not investigate, the complaints that are made to it. I believe that millions of complaints have not been dealt with.

[Mr Leech]

I thank my fellow member of the Select Committee for his intervention. He will recall that we visited Google as part of our inquiry, and he will also recall the complacent attitude taken by its representatives to the whole issue, as though it had nothing to do with them and was not their problem. I think we all agreed that it certainly was their problem, and that they should take much more responsibility for tackling it.

Finally, I am disappointed that the Bill does not seek to repeal section 73 of the Copyright, Designs and Patents Act 1988, which was intended to encourage the roll-out of the cable network in the United Kingdom, and allowed cable operators to re-transmit public service broadcasters’ programmes free of charge. At a time when Sky and Virgin are willingly entering into commercial deals with public sector broadcasters for their non-public sector broadcasting content, it is a nonsense that they are still able to make money on the back of free PSB content.

[Alun Cairns (Vale of Glamorgan) (Con)]

Has not the technology out-developed the legislation? Should not section 73 of the 1988 Act be adapted to take account of commercial considerations?

[Mr Leech]

Yes, I think time is up for the likes of Sky and Virgin. They have been making a lot of money on the back of this for some time, and it is about time we brought it to an end.

By contrast, in the United States News Corporation has led the campaign for channels to receive fees from platform operators, which has resulted in over $2 billion being available for investment in original content and news production, so I urge the Minister to bring forward an amendment repealing section 73 of the Copyright, Designs and Patents Act.

[Jim Dowd]

I congratulate the hon. Gentleman on reading out so thoroughly the briefing provided by ITV on this issue, but is it not a fact that as long as there is an obligation to carry the terrestrial channels, the Government could either remove that obligation or charge the pay-TV companies for using the material, particularly Virgin, which has the TiVo machine that allows people to build up private on-demand libraries without paying any of the costs or having to watch any of the advertising?

[Mr Leech]

The fact remains that the likes of cable platforms are making significant amounts of money on the back of public sector broadcasting, which often invests a lot of money in original content. A very easy way of bringing this to a conclusion is to repeal section 73 of the 1988 Act, which is why I urge the Minister to introduce that through an amendment to the Bill.

In conclusion, although I welcome the Bill I hope the Minister will recognise its limitations and commit to addressing at least some of the concerns that have been raised. This Bill could deal with a number of the outstanding issues in relation to intellectual property.