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Intellectual Property

Volume 455: debated on Wednesday 10 January 2007

I refer to my entry in the Register of Members’ Interests. In addition, I express my disappointment and that of my colleagues in the House of Commons band MP4 that we will not secure a single penny from our greatest hits recordings in 50 years’ time if the Gowers review suggestions are followed.

I congratulate Andrew Gowers on producing a thorough and complete report on intellectual property, and in meeting the terms of reference set by the Treasury. He went about his business with the professionalism and diligence that one would expect of someone with his experience and background. It was always going to be a tough task comprehensively to review IP in the United Kingdom and how it applies to the UK economy, and then to set out recommendations about how things could be improved. It was always a task that would be mired in controversy, at the very least.

The report was eagerly anticipated. I do not think that there has been such a scale of submissions during the consultation period of any Government review, and a similar thing can be said about the report’s publication at the beginning of December. Again, the number of responses from all the different stakeholders was almost unprecedented. The Andrew Gowers report will be considered and debated not just for the next few weeks and months but for the next few years.

This is my first and probably only appeal to the Minister: do not close down the debate now. Let us consider the Gowers review as part of the process of the Government’s coming to their own decisions and conclusions about the future of IP and copyright. The review should go out for proper consultation so that all stakeholders have an opportunity to respond. I hope that the Government put a brake on the Gowers process and ensure that all stakeholders are consulted and have an opportunity to respond fully and comprehensively to the recommendations.

The Government must do that. The knowledge economy is fundamentally important to the UK, and I am sure that I do not need to tell the Minister that. It represents some 8 per cent. of our total gross domestic product, and the latest assessments are that up to £50 billion of gross output is dependent on it. We must get this fundamentally right.

More important that anything else, we must get the balance right so that creators are rewarded for their talent and initiative and so that we have the proper business environment, framework and culture to allow the development and growth of our IP.

I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on securing the debate. As chairman of the all-party group on music, I ask him whether he agrees that the law must be strengthened to cover those people who facilitate piracy. As a musician, he knows that the basis of copyright is to give the musician and other creators of music the chance to make a living. Does he think that it is important for the Minister to take up that matter?

I totally agree, and I pay tribute to the hon. Gentleman’s sterling chairmanship of the all-party group, which we all very much appreciate. He raises crucial points about things that have not been properly considered in the review. We must ensure that musicians and people who create music are properly rewarded for their initiative. It is totally unfair that the current situation will allow illegal downloads to continue. We must ensure that we have a viable music industry that can counter all of that.

The review is a rare opportunity to consider whether our IP rules strike the right balance for rewarding creativity and allowing businesses the opportunity to develop and grow the knowledge economy. The Gowers report will stand or fall on whether the balance has been effectively struck. On the face of it, I do not believe that it has. The report fails to recognise the rights and interests of so many of our creators and artists.

At first look, the review seems to be a modest document. It makes a little tweak here, does a bit of sorting out to facilitate enforcement, and removes some of the more general inconsistencies that Gowers identified. However, it is not what the report says that is important but the impression that it gives to so many stakeholders in our creative economy. The Gowers review may have undermined the confidence of a whole sector of our creative economy, particularly musicians and artists who now feel undervalued, unsupported and misunderstood in respect of what they are trying to achieve through copyright protection.

It seems at times that Gowers decided unilaterally that copyright no longer belongs to the creator but to the user, the consumer and the general public. It is given back to the creator only as some sort of pat on the head or grudging concession. That view has infuriated the creative community in the UK, and the unprecedented collection of signatures of 5,000 UK musicians, from the humble to the high and mighty, who have come together to demand fair play for musicians, demonstrates the great concern of our artistic community, which feels unsupported and undervalued. The campaign is supported by the general public. A British Phonographic Industry opinion poll found that more than 60 per cent. of the public support these musicians and think that they should be treated equally when it comes to term extension.

The review was a missed opportunity to support UK performers and the music industry, and it shows a lack of understanding of some of the key copyright issues and how they apply to artists and musicians. Copyright term extension has become the totem of the review and the hottest issue. It was probably the most controversial element that Gowers touched on. It is the one thing that has highlighted the feelings of being undervalued among our vital creators.

All the open right groups and digital right groups that have emerged in the past few years have been able cleverly to suggest that this has all been about the big bad music industry and its multimillion pound musician chums. I think that Gowers bought into the perception that that was what term extension is all about, but this is not about the Elton Johns, the Robin Gibbs and the Cliff Richards; it is about the guys who played bass on Robin Gibb’s records, and the percussionists and drummers in Cliff Richard’s bands. They are guys who had the once in a lifetime opportunity to perform on a hit record and they should be rewarded throughout their lifetime for the recordings that they created.

It is certain that Andrew Gowers looked closely at extension. He even put together a select group of Cambridge economists to consider it further. However, looking at their report it is clear from the outset—from the first few words—that they were predisposed to reject term extension. Not a creator, an artist or a musician was consulted. He never solicited or sought their views on that critical point.

Andrew Gowers does not even attempt to consider why composers, novelists and the rest of those people should enjoy longer terms than sound recording artists and investors. Dismissively he focuses only on the wealthy musicians. Of course they will attract the media attention; that is inevitable in our culture. However, millions of people throughout the UK participate in music, and for every Robin Gibb there are thousands on thousands of musicians who will earn less than £10,000 a year. It is for those people that we say that the copyright term extension should be considered.

We must remember that the British music industry is perhaps the most successful and innovative music industry anywhere in the world. It has had decades of unparalleled success in finding new talent and nurturing it and in ensuring that music has become one of our key export industries, which contributes so much to the Exchequer. The British music industry is fragile and it exists on the front line of technological and digital innovation. It battles week in and week out to try to stay abreast of all the new developments and technology in the digital revolution. We undermine that and do not give it our support at our peril. I hope that the Minister will listen to the clear representations, views and anxieties that the British music industry in all its forms and guises has about what has been suggested in the Gowers review.

Everywhere in the Gowers report there are further erosions of the rights of musicians. I want to mention a couple of the recommendations as I see them. Recommendation 11, for example, proposes that copyright-protected music can now be transformed into new works without the permission of the original creator. The Minister will know that better as “sampling”, and I am sure that he will find it in his vast collection of hip hop albums. I am the first to recognise that hip hop has been a fantastic development in the genre of popular music, and it has contributed much worldwide to the ongoing success of British music. Gowers recognises that, too. He has looked to the US example and decided to copy that. However, the US transformative use exception is described in legal journals as the most problematic exception in US copyright. Just as the US has discovered difficulties with that, Andrew Gowers has proposed that we copy that model. The European model, where authorisation is required from the artist before any of their work can be used in transformative recordings, works well. Surely it is right that UK creators should have the opportunity to say no to people who want to use their work in samples, especially if it will be used in a derogatory or offensive manner. Surely they should be rewarded for their music when it is used in the course of someone else’s performance.

Recommendation 8 is a brave stab at clarifying how copyright material could be copied for personal use, for example by taking a CD and putting it on to an iPod. Gowers proposes a new exception that will give consumers a right to make limited copies for their own private use. I think that is right. The law has to be clarified, and no one has ever been prosecuted for copying their CD on to their MP3 player, but along with that there must be a sustained and robust education campaign. Just as the British music industry is coming to terms with digital downloading and growing that market, it might be seen as a green light for anyone to be involved in illegal downloading. It very much misses the point, to come back to what the hon. Member for Glasgow, North-West (John Robertson) said; it is not about copying for personal use, but about the mass of peer-to-peer sites that have emerged on the internet. Many people have uploaded their whole massive libraries and encouraged people to download illegally from them. British Music Rights has found that 80 per cent. of the music on the average MP3 player has been acquired illegally. That is the sort of thing that Gowers should be looking to tackle.

Gowers has considered how creators can be compensated for the loss of revenue through CD copying and suggests that that should be added to the cost of a new CD when it comes out. That is a great wheeze given the perception that in the UK CDs are already overpriced. It will obviously have an impact on the competitiveness of the UK industry once again. That requires further assessment.

There are good things in the Gowers report, and I come to them last as I recognise and acknowledge them as being useful and productive. I completely support the idea of further rights enforcements coupled with better copyright education for consumers and beefing up trading standards so that illegal copiers can be pursued. He makes good suggestions about stiffer penalties for people who have been prosecuted under the new legislation. He says good things about education, too, and it is right that he recognises the pioneering work that British Music Rights has done in that regard. I am glad that he recognised that in his report.

As I have said, there is an awful lot in all of this. I have not even had time to touch on matters such as orphan works or the new patent office, which are all crucial to the debate. It is clear and certain that it needs further review, scrutiny and consultation. We need to allow all stakeholders—all those who have an interest in developing a knowledge economy—to come back and say what their views of the Gowers report are. It is almost certain that the balance is not right. Artists and creators are unfairly discriminated against, and right now they are feeling particularly undervalued. The British music industry is a success for the UK economy and we have to do all we can to support it. I hope that the Minister will listen carefully and clearly to the pleas and anxieties of the UK music industry, and that he will indulge the music industry by perhaps meeting its representatives to discuss some of its issues.

It is important that we get this right. It is crucial for our whole economy. The knowledge-based economy is fundamental to the UK, and so much now depends on it. We have the review, which we could use as a base for the UK response. I hope that the Minister will listen to the many voices that have expressed concern about what has been suggested and that he will respond favourably and robustly to their views and concerns.

It is a pleasure, Mr. O’Hara, to serve under your chairmanship. I enjoyed and found stimulating the way in which the hon. Member for Perth and North Perthshire (Pete Wishart) introduced this important debate. He has already declared his registered interests. Rather more modestly, I can only declare that I do not think that I have any hip hop recordings; I doubt whether Lonnie Donegan counts. However, I have a fine collection of Runrig CDs, the originals and not bootleg recordings—probably the finest library of Runrig in Croydon. I am a serious fan.

I note the contribution made by my hon. Friend the Member for Glasgow, North-West (John Robertson). My hon. Friends the Members for Cardiff, West (Kevin Brennan) and for Brigg and Goole (Mr. Cawsey) might have wanted to catch your eye, Mr. O’Hara, despite it being a half-hour debate, but because they are Whips they are not able to speak. They are here because of their interest, and because of their artistic input to our culture. Those, I think, are the right phrases for this occasion.

More seriously, the Gowers review considered intellectual property and policy. I hope, Mr. O’Hara, that you will not be offended if, for brevity, I refer to intellectual property as IP. The number of responses to the call for evidence—more than 500—and the wide variety of those who responded were unprecedented for what has in the past been regarded as a rather specialised and dry area of law. That illustrates the important role that intellectual property now plays throughout society. Indeed, it will grow in importance.

Why is IP so important? The answer is simple. The hon. Gentleman has given his analysis. In a changing world the United Kingdom’s current and future success in the global knowledge economy depends on the ability of our creative and high-tech industries to compete. That is certainly true for music, something in which Great Britain excels. For example, the creative industries accounted for 7.3 per cent. of gross value added in 2004.

IP is critical to those key businesses, as it allows them to protect their investment. They therefore need an effective and balanced IP regime. That is why an independent review of our IP framework was commissioned. I am pleased to say that the Gowers review found, generally speaking, that the current system does not require any big fixes. However, it recognised that the IP regime faces challenges from globalisation and increasing digitisation.

In an increasingly global world, many aspects of IP rights are territorial. Despite improvements to the European patent system, it remains more costly for businesses to protect their ideas here than in comparable markets such as the United States and Japan. Digitisation brings with it great opportunities for new markets but also increased opportunities for piracy and counterfeiting. For example, in 2005 the UK music industry estimates that it lost more than £500 million through pirated CDs and online file sharing.

The review makes practical recommendations on how we can respond to those challenges and opportunities, and I am pleased that the Government welcome the report and will be taking forward those recommendations for which we are responsible. I would like to consider three key areas: strong and effective enforcement, which was referred to by my hon. Friend the Member for Glasgow, North-West; reducing costs and complexity for businesses; and improving access to content.

The Government are committed to a strong and effective enforcement regime for rights holders. IP crime not only damages rights holders and our industries, but impacts on consumers, small businesses, our creative industries and on people’s lives and their health. For instance, the World Health Organisation estimates that up to a tenth of the world’s medicines are fake, which reminds us that it is a wide issue. Music is one important area, but there are others.

The review recognises that the national lP crime strategy has played an important role in providing a co-ordinated approach. It makes important recommendations for improving the framework in order to maximise the effectiveness of our work. I am delighted that the Home Office recognises IP crime as an area for police action, as a component of organised crime, within the updated national community safety plan.

We will increase penalties for online infringement of copyright, which is currently a maximum of two years’ imprisonment, to bring them into line with the penalty for physical infringement of copyright, which is currently a maximum of 10 years’ imprisonment. Trading standards officers will be given new powers and duties to enforce copyright infringement, with an additional £5 million in 2007-08, to assist with the early implementation of that new role. My colleagues at the Department for Constitutional Affairs will be considering a number of issues, including ways to promote mediation as a cheaper and more effective way to resolve disputes.

The review identified that the costs and complexity of the IP system can sometimes be prohibitive for businesses. To address that, we are already exploring opportunities for work-sharing agreements for patent processing with Japan and the US. We will continue to work with our European partners to seek improvements in the current patent system in Europe—for example, by reducing translation costs, through the London agreement, and ultimately by working towards a community patent.

We will also be working with industry to improve the support and advice on IP that we give to businesses both here and abroad. In addition, we will build on the success of the Lambert model agreements, already recognised in a pan-European context, by working on consortia agreements. Those measures have simplified the transaction costs for university to business licensing, and we will work with industry to draw up business to business model IP licences.

Consumers will benefit from an improved access to content. Gowers recommends changing the law to clarify when consumers may format-shift content that they have purchased—for example, setting out when music fans will be able to transfer their CDs on to their MP3 players. Naturally, a balance between consumers and rights holders has to be maintained. That will not provide carte blanche for unlimited copying; it will be for personal use only. Improving access to content also means ensuring that consumers know what they are buying and what they can do with it. We will therefore need to consider clearer labelling of digitally protected works. If appropriate access is hindered, there should be a simple mechanism for reporting it, so that something can be done.

The academic, educational and heritage sectors are important to our future success and our cultural identity. They will benefit from exceptions that respond to the needs of the digital era, such as enabling distance learning via secure sites and permitting the easier preservation of works for posterity.

Another recognised area of difficulty concerns orphan works—those works for which the copyright owner cannot be found. Gowers recommended a voluntary database, on which copyright holders can register their ownership. More contentiously, it recommended developing an orphan works provision. That is not something that the UK can do. It is a matter for the European Union, and we will be informing the EU of that recommendation.

The terms of protection for sound recordings were very much the focus of the hon. Gentleman’s introduction. The Gowers review looked closely at the terms of protection for sound recordings and performers’ rights in sound recordings, including commissioning an economic study to assist them. It is important to emphasise that that issue is a matter of EU competency. That is why the recommendation of the Gowers review was made to the European Commission. The Commission will be looking at the issue as part of its work programme in 2007. It will be up to the Commission to evaluate both the Gowers analysis and any further work in that area when it considers the question. The hon. Gentleman calls for continued debate and an opportunity for representation. With the Commission considering the issue this year, it seems to me that there are adequate means for his industry in the UK and across Europe to make representations.

I understand and accept that term extension will be a matter for the European Union, but what is the Government’s view? The Gowers review recommends that term extension should not be exceeded. What will the Government say to European Union officials in the light of that recommendation? Will they respond to it?

We have noted the position of the Gowers review. The Government are still considering it; we have not yet formulated a definitive view. I repeat that it is largely a matter for the European Commission. Given the time scale, the industry will still have the opportunity to make proper representations.

I congratulate the hon. Gentleman again on enabling us to have this debate, and for the good way in which he presented the issues. I thank my colleagues for their attendance; they are here as a sort of silent backing group.

Question put and agreed to.

Adjourned accordingly at nine minutes past Five o’clock.