Design Right, Artist’s Resale Right and Copyright (Amendment) Regulations 2023

Viscount Camrose Excerpts

Monday 20th November 2023 Grand Committee

Moved by

[Viscount Camrose]

That the Grand Committee do consider the Design Right, Artist’s Resale Right and Copyright (Amendment) Regulations 2023.

[The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Viscount Camrose) (Con)]

My Lords, I beg to move that these regulations be considered. They and the Intellectual Property (Exhaustion of Rights) (Amendment) Regulations 2023 were laid before the House on 16 October 2023. Intellectual property—IP—matters. The IP framework protects creations of the mind, such as inventions, literary works, symbols and names used in commerce. The UK system is widely regarded as among the best in the world. Our IP system is built on laws that ensure consistency, certainty and balance. It has not only helped to incentivise innovation and the creation of new technologies and products but promoted competitive markets and consumer choice. Maintaining a balanced, consistent and stable IP framework is crucial for businesses, consumers and investors.

The draft regulations before the Committee today use powers contained in the Retained EU Law (Revocation and Reform) Act 2023—the REUL Act—to amend or restate certain provisions in IP legislation. They make targeted changes, to the benefit of our IP framework, in line with the aims of the Act. I will take each set of draft regulations in turn, beginning with the Design Right, Artist’s Resale Right and Copyright (Amendment) Regulations 2023. Subject to noble Lords’ approval, they will amend provisions in four pieces of IP legislation. I will explain more about these.

The Design Right (Semiconductor Topographies) Regulations 1989 provide protection for designs that are semiconductor topographies, implementing international obligations under the World Trade Organization’s TRIPS Agreement. Semiconductors, commonly referred to as chips, are the core component of all electronic devices. The semiconductor topography design right is an IP right intended to protect the design of specific semiconductor products, such as circuit boards, which can be relatively easy to copy.

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It would be worth having any thoughts that the Minister has at this stage. I look forward to his response.

[Viscount Camrose (Con)]

My Lords, I very much thank the three noble Lords for their valuable and interesting contributions to this debate. As I said in opening, IP matters. The IP system exists to encourage innovation and the sharing of information, creativity and knowledge. It provides individuals and businesses with the confidence to invest their time, money and energy into developing something new. That is why the Government remain committed to a world-leading IP framework. We hope these regulations will ensure that the IP system continues to support innovation across the economy and will make some targeted changes to the benefit of our IP framework.

I shall respond to some of the important questions raised in the debate. The noble Earl, Lord Clancarty, asked about ARR. I thank him for his kind words and support for the changes to ARR in relation to the change of currency. He mentioned the benefits to smaller artists of the ARR regime and the noble Lord, Lord Clement-Jones, expressed similar support. Under that change, artists who continue to receive ARR payments will see an estimated average increase of around 7%, with the highest-value artworks obviously experiencing the largest increase. In addition, when UK inflation is taken into consideration, the minimum threshold resale price for ARR eligibility will actually be lower in real terms than when it was set in 2006.

The noble Earl and the noble Lord, Lord Clement-Jones, asked about government policy for ARR in free trade agreements and why ARR is not included in some negotiations; the noble Lord, Lord Stevenson, also touched on that matter. It is current government policy to support ARR globally via international fora as well as via UK free trade agreements. For example, in our recent free trade agreements with Australia and New Zealand we negotiated provisions to provide ARR on a reciprocal basis—that is, the UK will provide ARR royalties to Australian artists and vice versa.

Noble Lords asked about provisions in FTAs that are still being negotiated, specifically with India and Canada. They will forgive me if I cannot comment at this point on negotiations that have not yet concluded. Needless to say, I am happy to set out more information as it emerges on where we are with these or other free trade agreements.

I turn to the issue of exhaustion. I note the views of the noble Earl, Lord Clancarty, on the UK’s existing UK-plus exhaustion regime and on making the UK-plus regime permanent. As I think everybody in the Room agrees, this is an important matter. As the noble Earl is aware, the Government have consulted widely on it and continue to consider what the UK’s eventual IP exhaustion regime should be. Work to consider the decision on the UK’s future exhaustion regime is ongoing. We intend our future regime to strike the right balance between consumer choice and fair market pricing, protecting creators and promoting competition. The Government are aware that businesses would like certainty about future arrangements that will be affected by this decision. We will let stakeholders know the outcome of the policy decision in due course.

[Lord Stevenson of Balmacara (Lab)]

I think we all asked for a bit more detail than the Minister’s “in due course”. Could he be a bit more specific?

[Viscount Camrose (Con)]

Indeed. DSIT has been making representations to precisely that effect across government and that process is in train. I cannot provide a date for when it is going to be complete.

[Lord Stevenson of Balmacara (Lab)]

Could the Minister perhaps hint at what form it might take? Are we at the White Paper stage of the process or will it just be a statement that the issues are finished?

[Viscount Camrose (Con)]

Perhaps I had better write to all noble Lords present to say exactly what form that will take.

[Lord Clement-Jones (LD)]

I am sorry to interrupt the Minister as well. In addition to the timing, it would be useful to know what the instrument is going to be. Will it be another consultation? We have had a consultation, which finished last year, and now we have the SI. Is there going to be another consultation with another SI? The whole process needs unpacking a bit.

[Viscount Camrose (Con)]

That is fair enough. What I am hearing is that noble Lords want to know not just when it will be but what it will look like when it happens. That is an entirely reasonable request, to which I am happy to accede.

I note the views of the noble Lord, Lord Clement-Jones, on how the UK-plus regime supports the publishing industry in particular. I recognise the importance of this issue to a variety of businesses, which have provided extensive contributions to the public consultation on this matter. On behalf of the Government, I thank those businesses for their constructive engagement during the consultation and since. The noble Lord also—no, I am getting ahead of myself. I will move on, except to note that this issue has the potential to impact so many business sectors and therefore it is important for the Government to take the time to get it right.

The noble Lord also mentioned his concerns about a potential move to an international exhaustion regime. As I mentioned, no decision has been made. However, I should advise noble Lords that we intend a future regime to strike the right balance between consumer choice, fair market pricing, protecting creators and promoting competition.

I turn to the matters raised by the noble Lord, Lord Stevenson. I am grateful for his and his colleagues’ expertise on this important area of policy. He raised the review of design rights. The IPO began a review of that legislation last year, with a call for views published in January 2022. We want to make sure that the UK design system best meets the needs of designers and businesses. The IPO is now working on policy proposals on which to consult, which will likely happen in the first half of 2024. The review is fairly wide ranging, as the law around designs is complex and has not been reformed in any meaningful way for some time. It is important to do this work properly to make sure that any changes work for users and all stakeholders.

The noble Lord raised concerns about transparency reports issued by collective management organisations not being audited. The purpose here is to align the treatment of CMOs with that of other organisations in Companies House of similar size; to not treat them differently simply because of the nature of the work they do as CMOs, and therefore not to require organisations that qualify as small to conduct a formal audit in that way, along with other organisations of their size, scope and scale.

Small CMOs will still be required to produce annual transparency reports and to abide by the regulations that govern their conduct and operations. Removing the statutory audit requirement strikes a fairer, more proportionate balance between risk and cost for these small entities. The changes to the audit requirements were in recommendations evidenced by the additional burden imposed on them during a 2021 post-implementation review of the regulations. To provide some reassurance, I hope: this change affects just seven of the smallest CMOs.

The noble Lord, Lord Stevenson, also mentioned the expansion of the European Economic Area and how it would affect our exhaustion regime. Currently, the geographical scope of our exhaustion regime covers the UK and the European Economic Area. If the European Economic Area expanded the Government would consider how that would affect our exhaustion regime, but we would not wish to prejudice such a decision.

I hope all noble Lords will recognise that these proposed changes support a balanced, consistent and stable IP framework that is crucial for businesses, consumers and investors. I absolutely recognise the strength of feeling and argument in favour of maintaining this regime, but meanwhile I commend these regulations to the Committee.

Motion agreed.