8/3/2019 Briefing for MPs on Intellectual Property

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Dear MP

Westminster Hall debate: Intellectual property and its contribution to economicgrowth

Next Tuesday, 9:30 to 11, a Westminster Hall debate will take place on the contribution of

intellectual property, including copyright, patents and design, to economic growth. Thedebate has been moved by Pete Wishart MP and comes as the Intellectual Property Office

(IPO) is consulting on implementing the Hargreaves Review of IP and Growth.

The Government recognises the importance of IP in supporting businesses in monetising

innovation and the importance of copyright in particular in providing the basis for well

functioning and competitive markets. To this end the Hargreaves Review sought to identify

areas where copyright law and licensing could be streamlined and updated to ensure it

supports growth and innovation to the full extent possible.

The economic impact assessment for the review estimates that implementing Prof

Hargreaves recommendations would add between 0.3 per cent and 0.6 per cent to annual

GDP growth. One of the most significant recommendations by the Hargreaves Review was

that copyright policy should be based on economic evidence. Despite copyright laweffectively regulating the production, trade and consumption of copyrighted content, changes

to copyright law have thus far not been based on economic evidence. As part of the

consultation to implement the Hargreaves Review, the IPO has established detailed impact

assessments for each of the recommendations, which can be found online. The IPO is now

seeking further economic evidence as part of the consultation to ensure that decisions to

update copyright law are based on best available evidence and the impacts on various

stakeholders are understood.

Making copyright licensing fit for the digital age

The 2006 Gowers Review of IP only mentioned copyright licensing fleetingly, which we

believe was a significant failure. Less than a year after the publication of Gowers an IPO

review of the Copyright Tribunal found that the importance of collecting societies, andcopyright licensing more generally, to the economy had increased as the means to copy and

diffuse copyright material grew. Without effective copyright licensing, through direct

negotiations with the copyright owners or blanket licences by collecting societies, businesses

are not able to deliver innovative products and services to consumers. In order to ensure

that consumer demand is met in a timely manner through legal services, copyright licensing

is absolutely essential. Therefore Consumer Focus welcomes Prof Hargreaves emphasis on

the need to enhance the effectiveness of copyright licensing in the UK.

With a view to removing barriers to economic growth, Prof Hargreaves considered copyright

licensing in some detail. The three most significant recommendations designed to optimise

copyright licensing for the digital age are:

y Digital Copyright Exchange: Prof Hargreaves recognised that obtaining copyrightlicences can be difficult and time-consuming. Numerous responses to the Reviews

Call for Evidence drew attention to defects in licensing procedures, among them

those from the CBI, News Corporation, Pearson, Reed Elsevier, an alliance of UK

photographers and the European Publishers Council. Prof Hargreaves recommended

that the Government should bring together copyright owners and other business

interests to establish the worlds first Digital Copyright Exchange. The exchange is

envisaged as interoperable databases, making it easier for copyright owners,

whether small or large, to sell licences to their work and for others to buy them. As

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such it would reduce transaction costs and speed up the process of obtaining

copyright licences. The Government has now appointed Richard Hooper to

undertake a feasibility study for the establishment of such an exchange, and the idea

has generated significant interest across the world.

y Extended collective licensing (ECL) schemes: The Government is proposing to

enable collecting societies to set up extended collective licensing schemes for

specific uses of certain types of work. Such schemes could only be established

where a collecting society already collectively licences copyright or related rights on

behalf of its members and where the collecting society is judged to be sufficiently

representative of creators in a particular sector. Once approved ECL schemes would

allow collecting societies to licence their members content, as well as non-members,

by providing non-members with the right to opt-out and to be treated in the same way

as a member in relation to royalty distribution. ECL schemes have been operated

successfully in Nordic countries since the 1960s and where first established to ease

the mass licensing of content for broadcast. ECL cannot be established for sectors

which are not represented by a collecting society, such as for example

photographers, and the Government proposes that collecting societies would need to

obtain the consent of their members before they apply for permission to operate an

ECL scheme.

y Minimum standards for transparency and good governance among collecting

societies: the UK is one of only three EU member states which does not regulate

collecting societies. Collecting societies enable the cost effective licensing of

copyrighted works for mass use, such as for example by radio stations, by allowing

businesses to obtain blanket licences for hundreds or thousands of works. However,

in response to complaints the Government continues to receive about some of the

15+ collecting societies operating in the UK, the Government is proposing to publish

minimum standards to ensure fairness, transparency and good governance across

the board. Collecting societies operating in the UK will be expected to adopt

voluntary codes in turn, following the good example of the music collecting society

PRS for Music. The Government is also proposing to create backstop power, whichwould be used in the event that collecting societies operating in the UK refuse to

adopt an appropriate voluntary code.

If you would like more information on the Hargreaves Review and its implementation, or

would like a briefing prior to the Westminster Hall debate on Tuesday, please contact Saskia

Walzel at saskia.walzel@consumerfocus.org.uk or 020 7799 7977.

Mike OConnor CBEChief Executive