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

Lord Clement-Jones Excerpts

Monday 21st July 2014 Grand Committee

We are where we are, and the Government have introduced this regulation, but I ask them to consider reviewing the existing regulation after a year to see whether it is facilitating or failing to facilitate digitisation. If it is found that there has been a chilling effect on digitisation, that investments have not been made and that the new partnerships have not been formed, I hope that the Government will consider separating the limit on the duration for which a collecting society can operate an ECL from the length of the licence that the collecting society can offer its customers. In other countries, that is either longer or left completely open. I would be grateful if the Minister could explain why the Government have introduced this particular feature of the statutory instrument and indicate whether they will be flexible, if it proves not to work well in practice, in seeing whether it can be modified to overcome the unfortunate consequence that the British Library and other cultural institutions fear.

[Lord Clement-Jones (LD)]

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

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

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

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

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

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

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

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

As I also said on Report:

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

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

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

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

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

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

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

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

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

“further value creation and cumulative innovation”.

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

[Lord Stevenson of Balmacara (Lab)]

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

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

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

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

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

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

--- Later in debate ---

[Lord Howarth of Newport]

If it turns out that this five-year limit is inhibiting investment and choking it off, and evidence is seen to that effect in a year or two’s time, would it not be sensible for the Government to take another look at this? The Government have made it clear in the impact assessment and elsewhere that they want the kind of mass digitisation projects that could be undertaken by libraries, archives and other cultural institutions to happen, but that needs very significant investment. Those who are to put up the investment capital for this need to be confident that they are going to get a return. They are saying that the timescale of five years is insufficient to get the return. With the uncertainty about licence renewal, there is a real danger that the investment will not occur. Would it not be sensible for the business department to keep an open mind on this and be willing to look at it again if there is evidence that the policy is inhibiting investment?

[Lord Clement-Jones]

Perhaps I may add a question so that my noble friend can answer them all in one fell swoop. Strangely enough, although I agree with the five-year initial term, it not clear, as the noble Lord, Lord Stevenson, pointed out, whether a subsequent authorisation can be longer than five years. The noble Lord, Lord Howarth, might be entirely delirious with a 20-year extension. I would not be very keen on that but he might think that it was a wonderful thing. But from my reading of the regulations, it is not clear whether or not that subsequent authorisation could be longer than the initial authorisation.

[Baroness Neville-Rolfe]

The noble Lords have raised good points in their passion to get this right. I would like to look at this and write to the noble Lords about what can be achieved. There is good sense in having clarity for five years to get things off the ground but the noble Lords have made the point about the period after five years and having a look at what makes sense.

I also commend the points that the noble Lords made about the part that officials have played in developing the IP regime and these regulations in particular. Perhaps unsurprisingly, my first meeting after today’s business is with the CEO of the IPO, and I shall be visiting it soon, so I will have the opportunity to pass on your Lordships’ kind words.

I have given due regard to the Secondary Legislation Scrutiny Committee’s decision and comments. We have had a good debate. The Government believe that these regulations are a fair and reasonable reform and I commend them to the Committee.