Intellectual Property

Lord C-J looks to the Future of IP policy

I recently gave a speech to the Inside Government Intellectual Property 2014 Conference 

Here is the text.

Intellectual Property Policy:The Way Forward

In modern times Britain has become renowned in for its creative industries, in particular for pre-eminence in the world of pop and rock music, for the work of its designers and architects and for its television and film content and formats. We are now coming to the fore in fashion and computer games.

This creative output comprises one of the UK's great assets.The UK’s creative industries are now worth £71.4 billion per year to the UK economy, at least 5% of the UK Economy and 10 % of all UK exports.

Sector growth outperforms all other sectors of UK industry and it now accounts for almost two million jobs.

A crucial factor in recent growth has been the tax treatment of film production. This has been followed by high end television and animation and in April the video games relief was cleared by the EU. The new theatre production tax relief and patent box will have a major impact too.

In July we saw launch by the Creative Industries Council of Create UK, the creative industries strategy. Its aim is to double the sector’s annual exports to £31 billion by 2020.

At the launch Vince Cable announced a £16m funding package to boost skills in the creative industries. This injection of capital investment is part of the Government's strategy to support the UK's position as a world leader in the sector.

Create UK calls for a “stable legal framework that allows rights to be protected and commercialised” and says “any consideration of amendments to the IP frameworks” needs to be “thorough, objective, evidence-based and transparent”.

This however has been far from the case since the conclusion of the Report by Professor Ian Hargreaves in 2011 designed to set out how the intellectual property framework can promote innovation and economic growth in the UK economy.

The impression given by the Report was that intellectual property rights are a barrier to innovation.

Even as far back as the landmark Statute of Anne in 1710 however the benefits of copyright, particularly the rights of creators, were recognized.

Indeed the title of the Act is: “An Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors or Purchasers of Copies.., etc”

As a result the provisions of the Digital Economy Act passed in the washup before the General Election of 2010, which would have given the creative industries some protection from digital piracy, remain unimplemented.

I myself in trying to make sure that there were greater powers to block infringing websites found myself depicted as an internet villain!

Luckily and thanks to the industry the Newzbin2 case brought by the MPA and the UK Pirate Bay case have established that an existing provision of the CDPA 1988 is effective in taking down these sites.

Following the Hargreaves Report we have had the Enterprise and Regulatory Reform Act which set out the legal basis for introduction of new copyright exceptions, Extended Collective Licencing and the treatment of Orphan Works.

It is hard to see, despite the elaborate process undertaken to introduce Exceptions, what major positive impact any of these with the possible exception of Parody, will have.

Indeed in a number of cases they seem to militate against the commercial licensing solutions being made available by rights owners.

Extended collective licensing and orphan works provisions have a narrow UK application and similarly are unlikely to make a major impact.

One area where there have been positive development is in the field of designs.

The ERR Act ensured that works of Artistic design would be protected (think chairs!) with the repeal of s52 now under consultation and the Intellectual Property Act introduced a criminal penalty for infringement of registered designs.

Admittedly some of us felt this should go further in the light of the fact that protection for 2D is so much better than for 3D.

Moreover in the end the provisions of the Bill were watered down so the test of whether a design was “substantially” copied was replaced by “with features which differ only in immaterial detail” for the purposes of criminal prosecution.

The ERRA also laid the ground for Collecting Societies Codes of Practice which lay down minimum standards of behaviour. Given the power of the collecting organizations this was welcome.

One major and welcome fruit of the Report is however the Copyright Hub which made a bright start thanks to Richard Hooper and  Dr Ros Lynch. Compared with nearly all the other reforms the voluntary solution of the Copyright Hub is highly likely to have a major impact combined with international application.

The Hub has received £150k in goverment funding. According to its new director Dominic Young it is changing from “signposting tool” into an “intelligent router” and it will make a major difference in taking down the barriers to effective copyright licensing.

But it will be shortly totally reliant on private sector business funding and I hope the industry will make sure that it goes on to be a great success with the necessary resources.

If it does, it has the potential to be a Global Hub for copyright licensing. London and the UK could be at the centre of a hugely significant and powerful means of ensuring that creators receive the fruits of their endeavours worldwide.

We are also making strides in music licensing through the Global Repertoire Database RD which has its Operations  HQ in London

Throughout the reform process the creative industries sector  have been concerned by the potential negative impact the reforms could have, with the potential to deter investment, risk jeopardising market-led developments and weaken performer/creators ability to benefit financially from their work.

Changes to IP law should be adopted only in response to a well defined public policy objective and market failure. They should be underpinned by robust Impact Assessments. In fact the quality of these has been poor.

Reform of copyright should be handled sensitively with the value of the creative industries, and any negative impact caused by changes to the law, firmly in mind and this has clearly not been the case.

Furthermore investment in the UK's creative industries can only really make a difference if the industry's intellectual property rights, particularly relating to the protection of their online materials, are properly enforced.

The industry has changed dramatically in the wake of the digital revolution. That there is a major issue regarding online intellectual property theft, in the form of illegal downloads accessed via pirate websites, is beyond dispute.

Communications watchdog Ofcom revealed last year that a staggering 1.5 billion files were illegally downloaded in 2012.

The MPAA in their report “Understanding the Role of Search in Online Piracy” assess the value lost through of piracy in the UK at £400m pa for music and film alone.

Indeed, the issue of intellectual property theft goes beyond the creative industries and impacts financial, professional and support services - industries that collectively form the backbone of the UK economy and the 'knowledge-based' economy that the UK has long relied upon for success.

The Chancellor George Osborne has recently spoken about promoting Britain's financial technology industry - or FinTech - as a global pioneer in alternative funding vehicles and digital currencies, such as Bitcoin.

However, the UK cannot hope to become a leader in this field without rigorous IP protection and enforcement.

The post Hargreaves reforms are not designed to prevent online piracy.

Advertising, often by well known brands on pirate websites, is propping up the pirates and encouraging them to continue in their IP theft activities.

The Police Intellectual Property Crime Unit (PIPCU), a specialist IP crime unit within the City of London Police, has been engaged in activities designed to disrupt the flow of money from advertisements to those that run copyright infringing websites.

The Follow the Money initiative led by Mike Weatherley MP, the former intellectual property adviser to the Prime Minister which is designed to get voluntary agreement from the advertisers and credit card companies not to advertise on these sites is a significant and welcome development.

The fact remains though that IP piracy represents an existential threat to the UK creative industries and the Government needs to put an emphasis on enforcement if it is to help the industry assert its intellectual property rights and combat the online pirates.

Major search engines have an important role to play too. They have often had an uneasy relationship with the likes of the BPI who demonstrate that illegal sites persist in coming high on search rankings despite literally millions of infringement notifications to them.

Google have recently announced moves which will downrank illegal download websites in searches.

There also needs to be a coordinated push to educate people of the importance of IP and of only downloading legitimate material via legal websites. This ordinarily means of course that people must pay for content and be strongly discouraged from illegal downloading.

The recent report Copyright Education and Awareness published this month by Mike Weatherley and rights holders such as the PRS is a greatly welcome development.

Of course he has already made a major contribution to IP education through Rock and Film the House which he founded.

We shall have to erect a statue to him when he leaves Parliament next year!

A key recommendation is about the IPO and a recommendation that there a broader IP Director General role is created along the lines of the US IP Tsar.

The Culture Media and Sport Committee rightly in its report last year raised a question mark over the Intellectual Property Office’s ability to be a strong IP champion but with recent personnel changes to that office  I am much more optimistic that a major change in mindset is occurring.

The fact is however if the UK creative industries are to remain the powerhouse they currently are, people need to pay for creative content that the industries produce.

There are a number of vital aspects that need attention:

• The protection of IP must be rigorously enforced and the Government should consider either implementing the provisions of the Digital Economy Act or ensuring that robust voluntary arrangements exist with the internet service providers, so that piracy is detected and deterred.

• Digital copyright infringement sanctions need to be enhanced. We urgently need to equalise the maximum penalties for digital and physical IP infringement.  I look forward to the outcome of the Government’s current review of the use of copyright infringement sanctions which is expected to report in November.

• We need to ensure too that there is a common understanding across the creative industries of what metadata needs protecting and how to do this. We need general acceptance of the Voluntary Code of Practice for Creating and Retaining Metadata in Images.

• PIPCU –the Police Intellectual Property Crime Unit-is a vital resource in combatting counterfeits and infringers. It has made a huge impact in its first year of operation. We -Government and industry- need to ensure its future funding beyond 2015.

• Then of course during the passage of the Consumer Rights Bill I have been arguing for better protection against lookalike products which whilst falling short of being counterfeit nevertheless are designed to give the cynical impression through sailing close to IP infringement that they are equivalent to the original product.

• 3D printing is already throwing up important issues. What forward thinking has been carried out by the IPO?

As it is there are major other issues coming down the track from Brussels. After an EU discussion paper in 2011 on the Single Market for Intellectual Property Rights debate will take place on matters such as user generated content, further  artists resale rights and other reforms.

DG Markt and DG Connect are clearly at odds. Where does the UK stand in this debate? In fact we need a great deal more European cooperation through for instance the European Union Observatory on the Infringement of Intellectual Property Rights rather than a raft of reforms.

The recent International Summit IP Enforcement Summit hosted by BiS and the IPO in London, designed to co-ordinate strategy and action was exactly what is needed.

The international dimension of IP is important to our ability to monetize our creativity overseas. I chaired an IP roundtable at a TIF-IN Conference in Qingdao, China for the creative industries and IP protection is a fundamental issue in doing business in emerging markets.

To its credit the Government have placed IP attaches in major markets such as China and Brazil which can advise UK companies on the IP landscape.

In conclusion.In the UK we have the potential to be the recognized world leader in the development of the digital economy.

But of course now in the digital economy there is increasing convergence –indeed symbiosis- between platform and content, between the tech sector and the creative industries.

creative industries.

There is no doubt that each sector is increasingly making use of relevant skills in the other and that of course means valuing the intellectual property of each other.

In recent otherwise excellent manifestos from the TechUK –which I helped to launch-and from COADEC there is no mention of Intellectual Property.

So my parting shot to the Tech sector is, please acknowledge digital realities, you and the creative industries need each other so recognize the value of IP and the fact you have a common interest in protecting it!

Thank you

by Tim Clement-Jones