At yesterday’s parliamentary debate on IP and the Hargreaves Review, John Hayes, the Minister for Skills announced that the Government’s response to the Hargreaves Review of Intellectual Property and Growth would be released within a month. The debate allowed MPs to voice their thoughts on the proposals put forward by Professor Ian Hargreaves in his report released in May 2011 and on the UK’s IP regime in general. It was organised by Pete Wishart MP who is not only the Scottish National Party’s Westminster Spokesperson for Culture, Media and Sport, but also a member of Scottish folk rock group Runrig. As this was a House of Commons event, the Minister for IP, was unable to participate as she does not sit in the House of Commons. The main take-away messages from the debate are set out below:

Evidence-based regulation. MPs agreed with Hargreaves’ suggestion that future regulation should be based on evidence as opposed to lobbying by special interests. However, a number of MPs voiced concerns about Hargreaves’ classification of evidence provided by industry as “lobbynomics”. They want industry expertise to be used and industry to take a leading role in any reform of the IP regime. (However, this may be a challenge given the remark by Ian Lucas MP (Parliamentary Under Secretary for skills in the last Government) that some of the members of Government responsible for our IP regime have weak industry contacts.) Mr Wishart also highlighted the risk of dismissing evidence that doesn’t say what you want it to.

Digital Copyright Exchange. MPs were uncertain about what exactly Hargreaves had in mind when he discussed a Digital Copyright Exchange. They agreed that a “one-stop-shop” for all types of copyright-protected works was a step too far and ignored the progress already made by industry in putting in place sector-based exchanges and databases. They suggested that a better approach would be to establish a central information source which would tell people about the different collecting societies and exchanges that already exist and which would explain how to go about seeking permission to use a particular type of work.

Responding to strong concerns from MPs, the Minister for Skills confirmed that any mechanism put in place would be entirely voluntary and that creators would not be penalised for non-participation as the Hargreaves Report had seemed to suggest.

Hargreaves’ proposal that “Government should appoint a senior figure to oversee [the Exchange’s] design and implementation by the end of 2012” was discussed. Most MPs agreed that industry should lead this and other developments and that any “industry champion” appointed by the Government should act as a form of project manager/consultant. Mr Lucas suggested that the Digital Copyright Exchange was a matter on which the Creative Industries Council should take the lead. (The Government announced the creation of the CIC last March, in the Budget speech.)

Exemptions. Mike Weatherly MP (European VP of the Motion Picture Licensing Company and presenter of a “House of Rock” show on local radio) took a pro-rights-owner approach. He said that the Government should think long and hard before providing for any new exemptions because they deny a creator his or her property rights. With regards to text and data mining, he pointed out that search engines already did this on a commercial basis and he could not see a case for making their lives easier. He argued that creators should be adequately compensated for use of their works in parodies, rather than there being a new parody defence. However, he thought that an exemption to facilitate archiving should be implemented, to assist organisations such as the British Library and also said that format shifting should be made legal. Many other MPs spoke in favour of a levy for format shifting, such as the one placed on copying devices in some other European countries. Many also expressed relief that Hargreaves did not propose a US-style fair use regime.

Orphan works. This was a hot topic. Some MPs expressed dismay that s43 of the Digital Economy Bill (which would also have provided for the licensing of orphan works) had been dropped and highlighted how the EU Commission’s proposal for an Orphan Works Directive had been released at the same time as the Hargreaves Report. MPs agreed that people who wanted to use orphan works (i.e. those whose copyright owner is hard to track down) should be made to carry out a diligent search before being granted permission to use the works by the State and that, if the orphan work went on to be “an international bestseller” and its creator then came forward, the creator should be compensated in some way. There was debate as to whether this compensation should be simply what the user of the works would have been prepared to pay at the outset, or whether it should take into account what the value of the work turned out to be. The Minister for Skills welcomed further input from MPs on the topic and said that the Government would provide guidelines on the extent of due diligence required and on the system for compensating a creator of orphan works.

Patents. Lorely Burt MP considered that the Hargreaves recommendations on patents had failed inventors. She highlighted how, in her view, the UK was anti-competitive because it does not allow certain types of computer applications to be patented, unlike the US. She was concerned that Hargreaves’ proposal to increase fees to try to remedy “patent thickets” would harm small and medium-sized enterprises and suggested instead that the UK implement a two-tier pricing system for patents like that in the US, with lower fees for SMEs. She said that taking out a patent under the current regime was often disadvantageous to SMEs, on the grounds that it made them a target for predator large companies which would challenge the SMEs’ patents in the courts, knowing that SMEs would be rattled by the prospect of having to pay costs whereas the large companies could carry on infringing the SMEs patent with the comfort of a £0.5 million cap on damages. (This is a reference to the limit on damages which a patent owner can claim in cases which are brought before the Patents County Court.) Finally, numerous MPs expressed support for the Patent Box proposal (namely the proposed preferential tax regime for profits arising from patents, not part of the Hargreaves Report itself).

SMEs. A number of MPs highlighted how numerous companies in the creative industries located in their constituencies were SMEs and there was an overall recognition that they were central to growth in the creative sector. Brian Binley MP agreed with Hargreaves that SMEs need help understanding IP laws and the way in which the IP regime can assist them to commercialise and protect their products. The Minister for Skills noted that two-thirds of the submissions made to the panel during the consultation period were from SMEs reflecting the importance of IPRs to them. Following a request from Lorely Burt MP, a meeting will take place to discuss the current UK IP regime and how it can be adapted to assist SMEs.  

Collective Management Organisations. MPs commended Hargreaves’ call for a code of practice for collective management organisations. However, Mike Weatherly MP suggested that this is something which industry could do without legislation.

International aspects. MPs agreed with Hargreaves’ proposal that the UK should prioritise international co-operation and they also discussed piracy in developing countries. The Minister for Skills referred to existing progress such as the Chinese symposium on IPRs and the appointment of IP attachés in countries such as India and China.

Piracy. Damian Collins MP (ex M&C Saatchi) commented that, whilst the quality of copies had significantly increased, the cost of copying had significantly decreased for pirates. He argued that industry should make material more easily accessible at a price that reflected the value of the material to the user. MPs discussed the way in which many companies had tried to modify their business models by offering material free of charge when accompanied by advertising or by charging a subscription fee rather than a fee for each single use and/or download. Therese Coffey MP said that, in the light of this, we should be careful not to look benevolently on those companies which refuse to help themselves by adapting. She also queried whether there would be a greater impetus from the Government to tackle the issue if the Treasury were to calculate the revenues it is losing as a result of piracy.  

MPs also questioned the accountability of search engines that listed illegitimate websites that provided access to “copies” and called for search engines to disclose how they went about listing results. Ian Lucas MP also touched upon the issue of vertical integration by search engine companies (such as Google’s acquisition of ITA Software). The Minister for Skills agreed to look into issues surrounding search engines further. The Minister for Skills agreed to look into issues surrounding search engines further.

Brian Binley MP pointed to the much-discussed wider social problem that the younger generation seem to think that they have a right to use material available online for free and stressed that this needed to be tackled. Finally, MPs urged the Government to stop dragging its feet on the Digital Economy Act. They pointed to the many advantages that the Act would provide, in their view, despite the bad press it has received, and to the “existing tension” in connection with this legislation within the Coalition Government.

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