Intellectual Property: British Economy

Pete Wishart Excerpts

Tuesday 28th February 2017 Westminster Hall

[Pete Wishart (Perth and North Perthshire) (SNP)]

I welcome your chairing, Mr Gapes. I also congratulate the hon. Member for Selby and Ainsty (Nigel Adams) on the fantastic work he does in stewarding and chairing the all-party parliamentary group on music. I refer Members to my entry in the Register of Members’ Financial Interests.

We do not do much wrong when it comes to intellectual property. We are an IP-rich and creative nation, with an IP framework that is pretty much the envy of most comparable nations around the world. Based on any global IP indexes, the UK is about the top country in all areas, such as protection of copyright, looking after patents and enforcement. We need that because we are an IP-rich nation with a thriving creative sector and an abundance of world-class creative industries. In any of the major disciplines in the creative environment—whether it is music, TV, design or fashion—the UK is among the top three. It is imperative that we create the optimum conditions for our inventors, creators, designers and wonderful artists to develop their businesses and grow, so that we can continue to do well as a nation.

Intellectual property affects every single one of us and impacts on nearly every aspect of our day-to-day lives. The content we consume, support for our small businesses and the research and development arms of our multinational companies are all predicated on a successful IP framework. We tinker and mess with it at our own risk. It is vital to economic prosperity in the UK and is the foundation from which people can derive value from their innovation and investments.

The statistics speak for themselves. As the hon. Member for Selby and Ainsty said, the creative industries alone are worth £87.4 billion a year in gross value added. They employ almost 1.5 million people in the UK, and about £1 out of every £10 of UK exports is predicated on IP-supported industries. It is perhaps the fastest growing sector in our economy. Is it not a wonderful way to reindustrialise our nation, by building and growing our economy on the imagination, creativity and talent of the people of this country? What a fantastic way to grow our economy.

It is particularly good to see the Minister in his place. He is the first Conservative Minister with responsibility for intellectual property we have had in this House; all the others have been in the House of Lords. That is a welcome development, because it allows hon. Members with an interest to debate these critical issues with the Minister and question him at departmental questions. I think he is the first IP Minister in this House since the right hon. Member for Tottenham (Mr Lammy) back in 2008. I look forward, as chair of the all-party parliamentary group on intellectual property, to working closely with the Minister. I would not say that it has been chaotic, but there has been an issue with how intellectual property has been stewarded by this Government. It has been shunted between various Departments, with no clear chain of command. At last, we have that, and I hope the Minister will take full advantage of the opportunities it presents.

As well as being valuable to our economy, our IP framework is constantly evolving, and we have to deal with current issues and new ones that await us around the corner. That is because IP and most of the things it is responsible for stewarding and looking after exist on the very cutting edge of technological innovation. We have to remain vigilant about where the dangers will next appear and how they will present themselves.

I am on my second Digital Economy Bill since joining the House. Looking around the Chamber, I note that the hon. Member for Cardiff West (Kevin Brennan) and the right hon. Member for Wantage (Mr Vaizey), who has just taken his place, bear the scars of the previous Digital Economy Act 2010. We just about managed to escape that one unhindered and in one piece. We now have a second Digital Economy Bill going through Parliament. There have also been two significant reviews of our IP framework over that period: the Gowers review and the Hargreaves review, which concluded a few years ago. Both of those have flavoured the Government’s response to the big issues in intellectual property.

The APPG on intellectual property has produced a series of reports and reviews, one of which was published today, about protecting intellectual property. I hope the Minister will give a considered response to the many things we discovered in the conversations we had with many stakeholders. I will turn to some of the conclusions we reached in the course of my contribution.

First, I want to look at the big external issues that impact significantly on our intellectual property framework. They do not come bigger than leaving the European Union. The most significant innovation in the European Union is the delivery of the digital single market. So much effort and energy has been put into that really important work over the past few years, and we are coming close to its conclusion.

While the digital single market has presented a number of difficulties and issues for our creative industries in the United Kingdom, it would be better to be in there, shaping that agenda, than to have to respond to what has been decided by others. Leaving the European Union will mean we have no access to shaping the agenda for the digital single market. The UK has been a strong pro-content industry voice in those EU deliberations, which sometimes balances the views of other member states that do not have the same sort of interests we do in ensuring that the content agenda and industry are properly protected. That will be lost when the UK leaves the European Union.

[Ian Paisley]

Does the hon. Gentleman agree that the single largest market for digital is actually not a country but the cloud? Where the legal protection resides for people who put their IP on to the cloud is really important, so making the UK the home of legal enforcement will therefore be essential.

[Pete Wishart]

It is difficult to disagree with the hon. Gentleman on that. We have to look at where the force of traffic is going, particularly when it comes to things like copyright, which is critical for a number of our creative industries. The copyright directives we have signed up to were designed within the European Union, but we are leaving the EU at a critical moment in the development of the digital single market. That could have a massive impact on our own IP legislation.

Most people we spoke to in the course of the APPG’s inquiry said that they would prefer to see the existing legislative framework maintained. We also looked at identifying some of the gaps in legislation that will have to be fixed in order to ensure that UK creators and businesses are properly able to protect their IP in a global market. For example, the erosion and loss of access to EU design rights for our design industry post-Brexit would have a significant and negative impact on our designers.

I also chair the all-party parliamentary writers group. We have great concerns about retaining the harmonisation of copyright across Europe. Europe is the largest market for books and will continue to be an important market for book publishers and writers in the future. It is therefore imperative that the UK’s copyright legislation is consistent with remaining EU members, to reduce additional costs for business.

We have two years left at the top table when it comes to the negotiations, consultations and conversations about the shaping of the digital single market. I encourage the Minister to use those two years as productively as possible, to ensure that the UK’s content industry will be properly looked after and represented after we leave the European Union. I hope he will reassure me today that IP rights and IP-supported business will be at the heart of any new trade arrangements and agreements we have with other nations throughout the world in the next few months and years.

As well as concerns about the EU and external issues, the APPG on intellectual property heard from witnesses about a number of emerging threats being faced by IP owners. What concerned us more than anything was the sheer range of those threats and how quickly they are emerging and developing. While technology provides huge opportunities for businesses to expand their market and access new customers, it can also undermine a creator’s ability to commercialise their intellectual property.

Those who seek to profit from IP infringement are more than prepared to exploit new technological developments to challenge the law, and they do not come any bigger than digital TV piracy. It is absolutely right for hon. Members today to have focused their remarks on the real threat of digital TV piracy. The hon. Member for Cardiff West is right that the Digital Economy Bill presents an opportunity to put that right. He is also right to say how slow Government seem to be to respond to those emerging threats and challenges. He and I both remember the early days of the music industry, which faced the same range of challenges, being at the forefront of technical innovation. The first Digital Economy Act, of 2010, probably had the music industry in mind more than anything else when it tried to deal with the issues of piracy by the sending of notifications and by talking about certain measures that could ensure that rights holders and artists would be properly protected. The Government have an opportunity with the current Digital Economy Bill to deal with the threat that has emerged and is now completely apparent. Nineteen per cent. of households have access to IPTV boxes. It is now television—production companies and satellite broadcasters—that is at the forefront of the challenges, and the Government have an opportunity to deal with that and put it right.

Another threat to intellectual property that we have heard about in the all-party groups is stream ripping. That is an increasing problem for the music sector and threatens not only musicians, but the new, legitimate safe-harbour streaming services. Again, the hon. Member for Selby and Ainsty was right to raise it as a concern.

What concerns me more than most of the things that we have heard about is the parasitic or copycat packaging used by competitors to boost sales by confusing and misleading consumers. That is not a new or emerging threat; it has existed for a long time, and we constantly hear about and return to it in the all-party IP group. However, something has to be done about it now. When we go to a supermarket and look for our favourite products, we see all the poor copies sitting right next to them—the packaging is deliberately designed to confuse customers. The Government now have to challenge this. It is totally legal at the moment, but it short-changes consumers and lets down some of our famous brands, which would expect customers to be able to go straight to them.

We have heard about a few issues with 3D printing. That offers immense opportunities for creators, businesses and consumers, but also presents many risks, which we are understanding more and more. Responding to the challenges is not easy, but I think that we have a means of doing that with the Digital Economy Bill. It is some six years since the last digital economy legislation and, if possible, the Government should look to do what they can to address some of the new challenges in the current Bill. It certainly provides an opportunity to tackle digital TV piracy.

There are some positive developments, as we have heard. The new voluntary code of practice agreed by the Government and some of the web hosts is progress. It does not solve or deal with the problem conclusively, but it is right to characterise that arrangement and agreement as progress. The code, which has been signed by Google, Bing, BPI, the Motion Picture Association and the Alliance for Intellectual Property, seeks to demote links to websites that are dedicated to infringing content for consumers in the UK.

While I was listening carefully and intently to my colleagues today, I had a look at some of the sites again. We still find that illegal sites selling artists’ works appear at the top of any searches too regularly, so the code is welcome and is clear progress. It shows what can happen when we consistently and continually ask the Government to do something. It was a Conservative party manifesto commitment. It is right to encourage Government as much as possible to focus on how this is all going to work out and not to rule out the prospect of legislation if it does not work. I think it was the hon. Member for Cardiff West who said that if there is no stick to encourage some of the web hosts, a further sanction will be needed—the Government should consider legislation if the current measure does not look as though it will work.

I also want to support the hon. Member for Selby and Ainsty on what we refer to as the value gap. We must ensure that the artists who produce all the wonderful works that we admire and appreciate are properly rewarded for the work that they do. Too many services use copyright-protected content to build businesses. They do not actually create any of the works—they just host them—but they seem to be earning the huge profits on the back of the artists and creators. They create that gap whereby they are earning millions and millions of pounds, while we still see struggling artists in our communities. We need to see the likes of Facebook, YouTube, Dailymotion, Bandcamp, Vimeo and Metacafe properly dealt with and see whether we can reduce the value gap. UK Music’s “Measuring Music” report, which we have heard about, highlighted the fact that one service, YouTube, increased its payments to music rights holders in 2015 by 11%, despite consumption on the service growing by 132%. That clearly demonstrates a value gap.

[Nigel Adams]

The hon. Gentleman highlights a very important issue. Would he welcome, for example, YouTube developing a subscription service so that creators could benefit more widely from any income driven through there?

[Pete Wishart]

The hon. Gentleman makes a fantastic suggestion. We have to encourage YouTube, which is, as we can see from the figures, one of the key players in all this, to see what it can do to ensure that musicians and artists are properly rewarded.

The growing significance of the music streaming market must not go unremarked. In the last four years, the UK music industry has grown by 17%, and the same period has seen a massive shift from consumers owning music to streaming it. The value of subscription streaming services jumped from £168 million in 2014 to £251 million in 2015. Consumers can access content by a means that was unavailable to our generation—I think I am roughly the same generation as the hon. Member for North Antrim (Ian Paisley)—while we were growing up. There are several means and methods whereby people can access the finest, newest content in the most convenient way, but as we consider all these things, and great though they are, please let us never forget the artists who produce those fantastic, wonderful works. What is the point of having all these hosts and all these things available to us if we do not treat properly those who produce the content? When we consider things such as the value gap, it is very important that we put the musician at the heart of all this. IP rights exist to protect our artists, creators, inventors and scientists, but it is vital that we get the IP framework right and remain vigilant for new threats and challenges.

--- Later in debate ---

[The Minister for Universities, Science, Research and Innovation (Joseph Johnson)]

It is a pleasure to serve under your chairmanship in this debate, Mr Gapes. I am grateful to my hon. Friend the Member for Selby and Ainsty (Nigel Adams) for securing this important debate and welcome the contributions of many of the hon. Members who have spoken.

During this important debate we have already heard about some of the many ways in which intellectual property and the creators and creative minds behind it contribute to the British economy. The Government recognise the importance of IP, as we expressed in our manifesto, in which we committed to making the UK the best place to patent, innovate and grow a business and to protecting IP online by working with internet service providers. I will use this opportunity to outline some of the steps that we are taking to make that happen.

It is clear that IP influences many parts of our daily lives and has an undeniable role to play across the economy. As hon. Members have noted, we as a country are rightly proud of our creative and innovative heritage. Our TV and film industries continue to enjoy worldwide success and, as anybody who watched the Brit awards last week knows, the same is very much true of our music industry, which produces what seems like an endless supply of chart-topping talent. The likes of Stormzy and Skepta were mentioned by my hon. Friend the Member for Selby and Ainsty, but there are others, such as Rag’n’Bone Man and Ed Sheeran, all of whom delivered great performances last week.

Our cutting-edge research base stands at the forefront of global innovation. The hon. Member for Sefton Central (Bill Esterson) asked what commitment the Government were making to support that R and D base. I ask him to look at the recent autumn statement, in which we delivered the single largest increase in research and development expenditure in 40 years, and we are committing a further £2 billion a year by the end of this spending review period to R and D. That clearly underlines the Government’s commitment to this country’s remaining at the cutting edge of science and innovation for years to come.

This is not just about pride; the statistics speak for themselves. Every year since 2001, investment in intangible assets has outstripped investment in physical assets. In 2014, UK businesses invested over £130 billion in intangible assets—£11 billion more than in physical assets. Over half of that £130 billion was protected by IP rights. That not only highlights the sheer demand for UK IP rights, but demonstrates the fact that many businesses, innovators and creators already recognise the benefits of IP protection, of which there are many.

IP rights encourage investment in research and innovation, reward original design and branding, and support all types of creativity. Businesses that manage their IP well grow faster and are more resilient. The use of patents, trademarks and designs is linked with the better creation, transfer and use of knowledge and higher firm productivity. One reason behind that is that the UK’s robust IP regime plays an essential role in improving the balance between risk and reward for innovation and creativity.

Hon. Members have noted that IP enjoys a prominent place in our industrial strategy Green Paper, in which the Government touch on IP in several ways. For example, we have announced a new piece of independent research on approaches to commercialisation in universities, as the hon. Member for Sefton Central mentioned. That will look at approaches to commercialisation, including how universities approach licensing intellectual property. That is just one of a number of announcements that were made in the Green Paper, which sets out the Government’s plans for a long-term strategy that builds on our strengths and prepares us for the years ahead.

The Prime Minister has been clear that we need an economy that works for everyone. The Green Paper marks the beginning of a dialogue to develop a strategy to deliver that. The UK already boasts one of the best independently judged IP systems in the world—the hon. Gentleman mentioned the Taylor Wessing ranking, which puts us third—but the Green Paper clearly signals the steps that the Government are taking to ensure that our IP system is not just fit for purpose, but unlocks the potential for creativity and innovation up and down the country. That includes a commitment to review how to maximise the incentives created by the IP system to stimulate collaborative innovation and licensing opportunities. The emphasis is on developing a strategy that spreads the benefits of our economic success across the UK. That is why the Government have also announced that IP representatives will be placed in UK cities in the northern powerhouse and the midlands engine—Manchester and Birmingham—to build local capability to commercialise intellectual property.

Let me turn to the importance of IP enforcement, which was a theme in several hon. Members’ remarks. Wherever the market—at home or overseas—the success and economic value of the UK’s intellectual assets highlights the potential risks when IP rights are not respected. The Government take IP enforcement seriously and believe that effective enforcement plays a vital part in supporting our creative and innovative industries. Effective IP enforcement also plays a vital part in denying funds to the many organised criminal gangs involved in counterfeiting, and in mitigating the harm—mentioned, for example, by the hon. Member for North Antrim (Ian Paisley)—caused by unlicensed manufacturing, which often goes hand in hand with labour abuse and environmental abuse.

The UK boasts one of the most innovative IP enforcement networks in the world, but we can never afford to rest on our laurels.

[Pete Wishart]

In our inquiry into protecting intellectual property, we heard just how threadbare trading standards is now, with the smallest resources that have ever been applied when it comes to protecting some of these areas. Will the Minister promise to look at that and perhaps to address some of the failings in resourcing trading standards?

[Joseph Johnson]

We certainly want trading standards to perform the function that we need it to perform, and we believe that the resources are in place to enable it to do so.

As I was saying, the UK boasts one of the most effective and innovative IP enforcement networks in the world, but we cannot afford to rest on our laurels. There are always new challenges to address. My hon. Friend the Member for Selby and Ainsty and the hon. Members for Cardiff West (Kevin Brennan), for North Antrim, and for Perth and North Perthshire (Pete Wishart) were right to recognise the serious challenge that illicit TV streaming and IPTV boxes pose to our creative industries. We will vigorously combat the normalisation, as the hon. Member for Cardiff West put it, of that harmful activity. It is theft. Last Thursday, the Government published a call for views, as Members have mentioned, to determine whether the existing legislation is working to tackle this important issue. It would not be appropriate to pre-empt the outcome of the call for views, but if the case is made that legislative change is required, the Government will take the necessary steps.