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Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014

Volume 756: debated on Thursday 23 October 2014

Motions to Consider

Moved by

That the Grand Committee do consider the Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014.

Relevant document: 6th Report from the Joint Committee on Statutory Instruments

My Lords, I shall speak to these regulations and the Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 2014 together. They introduce two ways in which orphan works can be copied lawfully and therefore made much more accessible to many more people. One is a UK-only licensing scheme, the other implements the EU directive on certain permitted uses of orphan works—the orphan works directive, as it is called.

There are literally millions of culturally valuable objects held in museums, libraries and archives that the public cannot get to see. Orphan works are creative works such as photographs, diaries, oral history recordings or documentary films that are in copyright but for which one or more copyright owner cannot be located. As copyright for published works generally lasts for the life of the creator plus 70 years, orphan works, which cannot be reproduced without permission, can remain unseen for a long time. At present, copyright for unpublished works can extend back to the Norman Conquest.

Being able to copy such works is important because otherwise the public have to travel to the archive where the work is held. A museum cannot make a copy to exhibit or to display on its website without the risk of legal action if the right holder reappears. Yet the taxpayer has to cover the cost of preserving these works.

The orphan works directive, which must be implemented by 29 October this year, will make it possible for cultural and heritage organisations to copy certain types of orphan works to display on their websites. It will give us access to Europe’s hidden cultural treasures from anywhere in Europe—for example, the German National Library. It does not allow commercial use, nor does it apply to photos or other standalone images at present.

The UK licensing scheme, provided for in the first set of regulations, will allow anyone to apply for a licence to use any type of orphan work, in any medium, for commercial or non-commercial use within the United Kingdom—for example, orphan documents and images in new books and orphan film clips in documentaries. Both these schemes have important safeguards built into them to make sure that they are fair to the owners of the orphan works if they are eventually found. They also allow for the use of so-called partial orphans, where only some right holders can be identified, with these regulations applying to those who cannot be found and permission gained from those that are known in the usual way.

To give a sense of how these measures will work in practice, I will look at an example from the National Records of Scotland collection of more than 150,000 maps and plans. The archive has an ink and colourwash plan of the village and harbour of Sandend dated 1893, part of a private collection from the Earls of Seafield. The surveyor, Hugh C Lowe, is not listed in the Dictionary of Scottish Architects and does not appear in death records. Without knowing when he died, the archive could not be sure that the work is out of copyright. If Mr Lowe died after 1943, the works could still be in copyright. Indeed, a large number of plans relating to Victorian engineering projects, such as the Forth bridge, cannot be copied.

As these orphan works are standalone images—not embedded in another work such as a book—the archive could not use the copyright exception provided by the orphan works directive. However, it could apply to the UK’s new licensing scheme. The archive would apply to the IPO for a licence online. Its application would show what it had done to find the right holders—what is known as a “diligent search”. This is an issue which has been much debated in this House. Merely stating that the work was found on the internet, without reasonable efforts to find right holders, would not be sufficient. The IPO will check that diligent searches are adequate.

To return to my example, if the museum wanted to adapt the Sandend plan, the IPO would consider whether this adaptation might be thought derogatory to the creator’s reputation. It is unlikely in this example, but if it were thought to be derogatory, the IPO would refuse a licence. Details of the work and a watermarked copy of the image—if it is a still image such as the Sandend plan—will be shown on the public register. This will enable right holders to check whether any of their works are being considered as orphans. Many orphan works are unpublished works created by non-professionals, and right holders are often unaware of having the copyright. That is why potential licensees need to look for the copyright owner, not the other way round.

Your Lordships have also debated fees in the past. In my example, the museum must pay a fee when it submits the application. This covers the cost of running the scheme. If its application is successful, it will have to pay a licence fee, which is passed on to the right holder should they reappear. The principles of transparency are important, and applicants will be able to see the cost of the licence fee before proceeding with the application. The licence fee will reflect the price of a similar non-orphan work being used in a similar way. For genuinely non-commercial use, such as display on a museum website, this will be minimal. Once the licence fee is paid, a licence for the specific use or uses requested will be issued in the name of the applicant. The entry on the orphan works register will be updated to reflect this. When the work is used, the IPO must be referenced as well as the creator, if their name is known.

Licences of varying lengths will be available as for equivalent non-orphan works. However, the longest term will be seven years. A reappearing right holder can claim the licence fee that has been held in trust for him or her by the IPO and no further orphan works licences will be issued for the work in question. If a right holder does not reappear, the licence may be renewed. Right holders can claim their fees up to eight years after a licence has been issued. After eight years, unclaimed fees will be used to offset the costs of setting up and running the orphan works scheme. Any surplus must be used for social, cultural or educational activity. Prospective licensees can appeal to the Copyright Tribunal about the licence conditions, the fee charged or a refusal to grant a licence. If the right holder feels that the IPO has acted improperly, he or she can appeal to the First-tier Tribunal.

Some potential users of both the directive and the licensing scheme would have liked to stretch further to other parts of Europe and indeed beyond—a sentiment that I share. Obviously, the EU can make laws only for its member states and the UK Government can offer licences for use only within the UK. Users are responsible for checking the legal position in any other jurisdiction if they wish to publish beyond these territories. I know that this is frustrating for cultural and commercial organisations, but the new measures are better than the current position, where no such lawful use is possible at all. Moreover, other countries are developing mechanisms to allow the use of orphan works, so licences or exceptions may be available elsewhere. The IPO is also exploring the possibility of reciprocal agreements with other jurisdictions to make this process easier, particularly among English-speaking countries. Constructive discussions are ongoing with Canada and with the United States.

Some noble Lords have expressed concern that the UK scheme ought not to crowd out non-orphan works. For example, there was a concern that people would use orphan works instead of non-orphan ones or commission new works because they thought that they would be free or cheaper than non-orphan works. This will not be the case because most users of the scheme will be looking to reproduce works of often unique historical interest for which there is no substitute.

The key point is that to license an orphan work you will need to conduct a diligent search, pay an application fee to the IPO—whether you are granted a licence or not—and pay a licence fee at market rate if you are successful. These safeguards mean that it will be easier to use non-orphan works instead of the orphan items. There is no application fee there and the price may be negotiable because there is a right holder to negotiate with.

I should perhaps comment on photographs. The Government are aware that the details of the right holder and other metadata can all too easily be stripped from a photograph on the internet, whether with intent to circumvent copyright or not.

The existence of legal means of reproducing orphan works does not itself cause this problem. It happens now and may be a criminal offence if done deliberately by a business. There are now swifter and affordable legal remedies in place to deal with such infringements, including the small claims track of the Intellectual Property Enterprise Court, previously the Patents County Court. For example, in the case of Sheldon v Daybrook last year the infringer agreed to pay £20,000 to the photographer for the continued and repeated unauthorised use of an exclusive photograph. The Government also continue to support the work of the Copyright Licensing Steering Group and the Copyright Hub, which are working on a voluntary code of practice for dealing with metadata.

Orphan works licensing could make things better for photographers, not worse. The requirement for and checking of diligent searches; the need to pay a licence fee; the ability to search the orphan works register; and the requirement to credit orphan works with the name of the creator—where known—and details of the IPO will make some unlawful use more obvious.

On pricing, the IPO has analysed a wide range of prices for non-orphan works being used in a wide range of ways. From these, it has calculated average prices which it will charge and has developed a pricing matrix that covers more than 5,000 different combinations of type of work and type of use. To give a couple of examples: the price of putting the Sandend plan on to the National Records of Scotland website would be 10p, as that is a non-commercial use. The price for publishing a 15-line orphan poem in an anthology with a print run of up to 500 would be £77.15, excluding value added tax. The IPO’s methodology was devised by a financial analyst and checked with the Competition and Markets Authority. These market-based prices ensure that orphan works do not distort the market for non-orphans, which I know has been a concern.

Another concern that has been raised by some is privacy. The introduction of the two orphan works measures should not impact on the privacy of living individuals. The directive allows unpublished works to be displayed on a cultural heritage organisation’s website only if they hold the work in their collection and if there is no reason to believe that the right holder would object. That means that the website can show only those works which are available to see if one visits the institution in person.

To conclude, the two measures before noble Lords are complementary, enabling different uses of culturally valuable orphan works: from striking photos in the RAF Museum, to films of life in India in the Northamptonshire Record Office, to the British Library’s unique sound recordings of oral history, which I have been involved with, to the scientifically valuable reports at institutions such as the Medical Research Council.

The measures respect copyright, protect right holders from likely and significant risks, and are trailblazing in offering the first online application system. They are good for right holders, cultural organisations and businesses, and good for citizens and consumers, who will be able to access more, and much more easily. I commend these regulations to the Committee.

My Lords, I welcome the order which would implement the European Union directive, transposing it into our domestic law. It is something that libraries across the European Union have worked towards for at least eight years, and I anticipate that libraries in this country will certainly wish to avail themselves of the opportunity to make new uses of orphan works that the EU directive allows. An example would be the British Library’s programme to digitise orphan works from the First World War period.

I also welcome, in principle, the domestic policy initiative to introduce a wider licensing scheme for orphan works. I very much welcome the noble Baroness’s recognition of the potential value of enabling much wider access to orphan works. However, there are questions as to whether the scheme as it has been devised will be used. I put it to the Committee that it is excessively bureaucratic and expensive. The regulations are not clear about precisely how bureaucratic and expensive, but they point ominously in that direction. As things are at this stage, there is doubt as to whether the British Library and other cultural and research institutions in this country will use the domestic scheme on a significant scale. Why should there be these doubts?

Regulation 4(2) states:

“A diligent search must comprise a reasonable search of the relevant sources to identify and locate the right holders of the relevant work”.

There is a question as to whether the requirements will in practice be “reasonable”. A somewhat alarming form of words is to be found a little further on in the same regulation. Paragraph (4) states:

“The authorising body may issue guidance on what sources may additionally be relevant in the case of different relevant works”.

We can see the genesis here of a very complex system.

As I understand it, the regulations will require item-by-item diligent search, regardless of the type or class of orphan work. This will be labour-intensive and laborious. The whole process will then have to be repeated after seven years. The impact assessment assesses that the cost of diligent search could be of the order of £176,000 a year, which is in the context of very low expectations of take-up.

Licensing is to be for specific purposes only, as I think I understand, but I would be grateful if the Minister would clarify what the impact assessment states on page 7—I am probably misunderstanding it. We are told at one point that,

“it should be noted that the domestic scheme provides for the licensing of individual orphan works for specific purposes, rather than permitting any mass licensing of works”,

but then the impact assessment tells us that the National Museum Directors’ Council, which represents major national and regional museums, has called for the use of a blanket/umbrella licence for non-commercial uses because that is the only way in which the scheme would be affordable. The impact assessment goes on to state:

“In light of the consultation responses, the IPO will develop a blanket licence to ensure that the scheme is affordable for non-commercial use of orphan works”.

I am not quite clear what is to be allowed and what is not, so it would be helpful if the Minister could clarify that.

Under the domestic scheme, as opposed to the European scheme, there are also to be fees for processing applications, which the impact assessment predicts could be £59,700 a year. Licensing fees will have to be paid upfront and the money that comes from them will be put into an escrow account. We are told that the licensing fees—and the Minister just repeated it—will be minimal for non-commercial uses of orphan works. She went on, I think, to suggest a range of between of 10p and £77 in her illustrative examples. The impact assessment also tells us that the conservative estimate of the number of orphan works in collections in this country is of the order of 91 million. If you multiply a minimal fee by millions, you arrive at a sum which could be very substantial. Moreover, if those licensing fees do not prove to be necessary to pay royalties to rights holders who turn up, they will not be returned to the institutions that have paid them at the end of eight years. This strikes me as being a kind of tax that the business department is levying on our cultural institutions. It is an odd thing to be doing. I just wonder whether in Whitehall the left hand knows what the right hand is doing. How can it be that the business department imposes a tax of this kind on organisations that are publicly funded through the Department for Culture, Media and Sport? Indeed, in the case of universities, it is taxing the very institutions that it itself funds. I am puzzled by this merry-go-round and not very happy about it.

Under the European scheme, there will be no upfront payments. The scheme produced under the EU directive is less bureaucratic than the scheme produced by our own Government. For example, the directive leaves the responsibility for defining and satisfying the requirements for diligent search with the organisations that are using the works; it trusts their good faith. The European Union scheme is more sensible and less burdensome than our own Government’s scheme.

I am also less than convinced by the estimate in the impact assessment that the running costs of the scheme to be operated by the Intellectual Property Office will be in the order of only £33,000 a year. As the authorising body, the IPO will have to set and collect administrative fees; it will have to process applications; it will have to verify that a diligent search has indeed taken place; it will have to set the licence fees; it will have to grant licences, with or without conditions; it will have to operate a searchable register of orphan works; it will have to verify that rights holders are indeed genuine and arrange to make payments to them; it will have to administer the escrow account containing the unclaimed licence fees; it may have to make its case to the tribunals that the Minister mentioned; and it will have to produce an annual report. Are we really to believe, as the impact assessment tells us, that all this work will be carried out by one full-time executive at EO(B2) level and that it will cost only £33,000? I find that implausible. If it could conceivably be correct, it must be because the department expects very little business of this kind to come the way of the IPO.

Indeed, the impact assessment is pessimistic. It anticipates that there will be only 1,500 to 3,000 applications each year and it obligingly does the sum for us and tells us that that represents 0.0017% to 0.0033% of the 91 million orphan works. Of course it is right to protect creators’ rights and artists’ rights but it must also be right—this is the balance we have to seek in policy—to encourage and facilitate cultural organisations to digitise the orphan works in their collections and thus to democratise access to them.

We seem here to be presented with gratuitous bureaucracy, which is very ironic in view of the Minister’s zealous commitment against excess bureaucracy. I wonder why her department and the IPO have not in the domestic scheme replicated the model provided by the directive, or indeed why they have not adopted a different kind of business model which would make it possible for cultural institutions to take out insurance against future claims by rights holders or to put aside contingency funds, and to be able to use the orphan works legally provided that they took those measures to ensure that they would be able to pay rights holders. In addition, why is there to be the same fees regime for non-commercial and commercial use? The Minister just told us that orphan works will not be in competition with non-orphan works. Why should there not be a discount or indeed an exemption from fees for the cultural institutions? Why not just allow, as the directive would, cultural institutions to demonstrate that they have applied a diligent approach to the collection containing orphan works that is in their hands? If any of those approaches had been adopted, the Government really would be facilitating mass digitisation.

We were told during the passage of the Enterprise and Regulatory Reform Bill that this scheme, once introduced, would be reviewed after a one-year period. That is a very good thing. We look forward to the review, which may be carried out by the noble Baroness’s successor but will none the less be valid and valuable. As it is, I worry that we risk forgoing the cultural and economic benefits of enlarging access to orphan works that we might have had.

My Lords, I welcome the implementation of the EU directive, but I want to talk exclusively to the domestic version of the orphan works regulations, which originated in Section 77 of the Enterprise and Regulatory Reform Act. I am sure we all recall with nostalgia the passage of that Bill through this House. Perhaps, in the light of his remarks, the noble Lord, Lord Howarth, should have backed my amendment to the European directive implementation in the Bill.

The Minister’s examples of the types of work that could be licensed and authorised have been extremely interesting, but—strangely enough—like the noble Lord, Lord Howarth, I wonder whether there will be a great take-up of these provisions. It seems that the volume of licences issued through the rather similar Canadian scheme is extremely low. I am told that only 42 licenses have been granted under Hungary’s orphan works scheme since it started in 2009. The revised impact assessment goes into great detail and downgrades the original estimates of use. Like the noble Lord, Lord Howarth, I wonder whether the contribution of these provisions will be worth even the modest cost of setting up and running the authorisation process, or the cost of initially obtaining authorisation. I share his doubts about the costs that are set out in the impact assessment.

Under Section 116A(3) of the Act, a work cannot qualify as an orphan work unless the owner of the copyright,

“has not been found after a diligent search made in accordance with the regulations”.

Indeed, the regulations lay on the authorising body an obligation to take reasonable steps to ensure that the search relied on by the orphan licensee satisfies the requirements for a diligent search, while the licensee is required to demonstrate that a diligent search has been carried out. These are very necessary safeguards to protect against error and abuse. Alongside the regulations, the IPO has issued guidance notes to assist someone who wants to satisfy the authorising body that he is undertaking a diligent search.

Perhaps I am being unfair, but it seems to me that the IPO, as the authorising body, has gone to considerable lengths to disclaim some of its responsibilities. When the noble Viscount, Lord Younger, was the responsible Minister, he assured the Committee on 28 January 2013 that the UK scheme includes a requirement that any diligent search is verified by an independent authorising body, but surely the current proposals do not constitute such a verification process. I understand that the IPO has said that it would not “police” applications. Moreover, it is stated in the Intellectual Property Office guidance on diligent search that the applicant is required to submit no more than a completed checklist of sources from which they have sought information. Although applicants are instructed to retain evidence in the form of letters, e-mails and so on, they are not asked to submit this with their application. This cursory procedure is consistent with the estimated size and budget of the scheme set out in the impact assessment. Perhaps that explains the very low figure.

It seems that a view has been taken by the authorising body that because of the provisions of the Data Protection Act it would be precluded from disclosing relevant details of an applicant’s search, such as the identity of the people who had been contacted. Surely the provisions of the Data Protection Act are disapplied in circumstances where they would inhibit the proper exercise of statutory functions. What is the argument for preventing disclosure? Are licences to be awarded on the basis of a few ticked boxes? By contrast, I understand that the Canadian and Hungarian schemes both require the submission of evidence so that proper verification of the searches can be conducted by the authorising body.

That is all very puzzling: a prospective user of an orphan work would be infringing copyright by going ahead and exploiting a work without obtaining a licence. An authorising body surely has an obligation to satisfy itself that what has been done by each applicant meets the due diligence standard—in other words, that the applicant has looked for answers in the right places, not the wrong places—and it is very difficult to see how an authorising body might satisfy itself on that score without actually having looked at what had been done and considering what might have been done. This could not be a box-ticking exercise. Over and above the question of whether the authorising body undertakes to give thorough and critical scrutiny to what an applicant has done so as to be able to make a judgment about what might or should have been done, there is the question of the oversight of the authorising body. The authorising body fulfils a statutory function. Who is entitled to see that it is doing its job, and how would that be done?

Moreover, in the absence of a requirement to disclose the nature of a search, as I have mentioned, how is anyone to ascertain whether the authorising body is doing its search? The IPO appears to be of the view that the only person with an interest here is a revenant rights owner. Is that the Minister’s view of the position? If so, can she say how proper scrutiny can be exercised? Especially in the light of this, I and outside bodies affected are very keen to clarify who or what is to be held legally responsible for improperly issued licences. It would seem appropriate for the author or performer to have the right to take action against the body issuing the licence, not least because it is accessible and issues of collecting judgments against it should not arise, as they will, almost by definition, with any party that has obtained an improperly issued licence. Will a claim lie against the authorising body as one would against any other infringer, including a small claims track? There is the possibility that an application is fraudulent in the sense that an applicant knowingly seeks to obtain a licence by deceiving the authorising body. In that case, I take it that the licence is voidable. Can my noble friend confirm that that is the case? Are there any sanctions for deliberate or negligent misidentification? Another possibility is that a bone fide applicant turns out to be an incompetent searcher. Can we assume that an applicant who has put a lot of misdirected effort into looking in all the wrong places should not be granted a licence? The guidance note made it plain that the process of seeking to clear copyright material can be time-consuming and tricky. A revenant rights owner could, I presume, apply to have a licence set aside on the basis that the search did not comply with the due diligence requirement. Can my noble friend confirm whether that is correct?

These points, I believe, go to the fundamental basis of the regulations. However, there are other issues, such as how long a period, if any, a revenant rights owner has at the initial stage to challenge a grant of a licence in respect of a work. Is renewal of the licensing period after the initial period always to be no more than seven years? What will be the relationship between the public register and the Copyright Hub? Surely this is potentially of considerable importance. Has any agreement with stakeholders been reached as to the kinds of search technology that should be used to constitute a diligent search? Some of the fears expressed by the noble Lord, Lord Howarth, might be allayed if there were clear search mechanisms that could be used by institutions. There has been some criticism of the wording of paragraph 3(6) and the fact that works where there is no subsisting copyright can be swept into these provisions but are not dealt with adequately. What can my noble friend say about that?

My noble friend helpfully outlined the safeguards that rights owners will have, particularly photographers, against the stripping of metadata to create orphan works. What does she know about the current take-up of the voluntary code on metadata? It is clear under the regulations that no sub-licensing is possible, and I welcome that, but what are the circumstances in which the authorising body will allow transfer? Finally, can back remuneration be claimed during the renewal period? I look forward to the Minister’s reply.

My Lords, I rise simply to make clear my complete agreement with the remarks that have just been made by the noble Lord, Lord Clement-Jones. One is talking here of the expropriation of valuable property, valuable assets—the product of the labour of the creator of the copyright in question, whether it is music, art or literature—and often the means by which the creator makes his or her living. The creator may have become somnolent and may not be using the creation in question, but that is no ground, normally speaking, for expropriating the asset.

Compulsory expropriation has to be safeguarded properly. The safeguard in the present case depends upon the diligent search. What is a diligent search? It is almost as long as a piece of string. What might seem diligent to one person might not seem diligent to another. It is essential, in my respectful opinion, for the diligence of the search to be verified before action can be taken on the basis of it. Without that verification—without proper attention being paid to the genuineness of it—grave injustice may be done and this House should not lend itself to such a possibility.

My Lords, I will speak briefly. I will not echo the words of my noble friend Lord Clement-Jones—it would be otiose to do so—but my concern is in relation to diligent search.

I feel that we are coming to the end of a long journey. This is something that some of us debated at length when discussing the Digital Economy Bill. Those discussions never came to fruition, but I remember that we had a number of assurances from the then Government about the importance of diligent search in relation to orphan works.

As the noble and learned Lord, Lord Scott, said, we are talking in many cases about very valuable assets. My noble friend the Minister and her department have been right to create what may be, in the words of the noble Lord, Lord Howarth, an intensive, laborious and bureaucratic process, but it is important that these assets are handled with care by whoever they may be dealt with in the years ahead. I congratulate both my noble friend the Minister and her predecessor, my noble friend Lord Younger, who have spent many hours on this subject trying to get it right.

Listening to noble Lords, I feel that the Minister is between a rock and a hard place in trying to please everyone. But I feel strongly that it would help if my noble friend could explain a little more about the process for diligent search and what is meant by “reasonable” before we come to a close on this, because there are many outside these walls who remain concerned about the future of these valuable assets.

My Lords, I declare an interest as a non-executive director of the Bridgeman Art Library, where the use of orphan works is a not inconsiderable part of its business.

The library has in fact benefited from, shall we say, the slightly relaxed attitude that has been so eloquently referred to by my noble friend Lord Clement-Jones and the noble and learned Lord, Lord Scott. My noble friend mentioned Canada and Hungary, where admittedly a very low number of licences are issued, but proper, diligent verification schemes are in progress there. We look to the Minister for reassurance.

My Lords, I thank the Minister for introducing the orders and noble Lords for their contributions to this debate. It is a bit of a reunion. I have been missing our regular fixes of IP craft and lore—and the pain that goes with having to read up on all this stuff again and trying to remember where we were the last time we were here. I hope there will be other opportunities, perhaps not in the immediate future, where we might get together. Maybe we should form a dining club or something and we could all go off and talk about it.

Like other noble Lords, I had some difficulty in disentangling the two orders. They point in slightly different directions, they do not take the same approach and the regulatory frameworks are rather different. But it seems a bit of a missed opportunity not to have had a single order, for the benefits of rights holders at least, which dealt with what the rules were and how they varied according to the domestic or the EU side. I can understand the logic for what the Government have done but it would have been possible, I think, to have had a go at that and come up with something that would have been easier to do.

Other points have already been raised in the debate, which I was going to touch on. However, again, we make a mistake if we try to think of this initiative, which was of course foreshadowed in earlier primary legislation, in the absence of considering how it impacts on the Copyright Hub. We all wish that well and think that it will be a huge step forward as regards the operation of the creative industries in this country—which must inevitably be dealing with exactly the same material as we are talking about here. If there is to be an effective Copyright Hub, it must also go to the 91 million pieces of information held in an orphan state.

Isn’t “orphan” a wonderful word? It makes you feel all warm and cuddly. You want to embrace these statutes and take them forward, because orphans must be helped. On the other hand, the reality is somewhat different.

I will make only a couple of points on the certain permitted uses of orphan works regulations, one of which is about the money. Like my noble friend Lord Howarth, I am not exactly clear what is happening as regards the fund that has to be created—if it has to be created—on behalf of revenant right holders when the relevant body operates to bring forward material that has previously been orphaned. It would be helpful if the Minister could respond to that so that we have a clear arrangement.

Given the amounts concerned—the quotations for examples that have been given already—they are so low that it is not reasonable to expect these bodies, many of whom are strapped for cash, to hold an escrow of moneys that could have been used to maintain and do this activity, particularly when it is likely that the payments out would be reasonably small and/or insurance could be obtained for it. A fair compensation is presumably trivial relative to the overall running costs of many of the institutions—certainly to the ones that I have been familiar with—and I would have thought that there is some room for flexibility. Perhaps that can be noted and picked up when we see the annual report or the first report on this.

My second point is that again, like a number of previous speakers, I am not sure what the logic of having a time-limited area is. If it is true that we are talking about material that is very unlikely to have revenant rights holders, and that an initial licensing period—which is certainly what we discussed when we talked about the primary legislation—is the appropriate thing to do, just in case it flushes out those things, then second and subsequent licences could easily be indefinite, particularly if there is a provision. I understand that the order says that if the right holder presents themselves and is clearly the owner of the work, the licence can be stopped immediately. I do not get the point of having excessive, burdensome bureaucracy over what would be a very small number of licences anyway at very low cost, which would cause both the institution and probably the IPO considerable additional work.

Other points apply to varying parts of both the regulations, and some of them are quite detailed, so I do not expect the Minister to respond to them all today; I look forward to one of her wonderful letters. First, there is the position of the revenant right holder. Is this person sufficiently considered by the scheme, and if so, is the treatment fair as a whole? The Government’s rather brave assumptions are that there will not be many revenants. I looked that up on Google and it turns out that it is a word for zombie—so there will not be many zombies. “Revenant” is probably a more technical term. Those that reappear, according to the Government, will be happy that their works have been uncovered, subjected to diligent search and licensed, and that the terms of the licences already granted—which cannot be varied—are fair. We do not know whether those assumptions are correct. However, I worry that a right holder who would have refused to grant a licence had he or she been located is unlikely to be pleased with the outcome, as the material is licensed and goes on the register as an orphan work, possibly with a licence that might be set to run for as long as seven years.

Stakeholders representing various right holders have already pointed out that the flow charts which the IPO had prepared made no reference to the possibility of a right owner who had not been identified by the applicant as part of the diligent search process coming forward once the application appeared on the register. The stakeholders suggested that it would be sensible to have a pause in the process once the application had appeared on the register, just for a short time before the licence was granted, to avoid the licence coming into force and the right holder shortly thereafter discovering that his or her work was being licensed.

The IPO has partially taken this concern on board but only to the extent that the flow chart now identifies the possibility of a right holder coming forward when the application is placed on the register, but before the licence has been granted. If that were to happen, the licence would not be granted under the terms of the scheme at all. It would be up to the right holder to determine whether a licence should be granted. However, the IPO has not been willing to allow for any specific period to elapse before a registered licence came into force. That is worth considering.

For works that have already been published, this might be a reasonable position, even though, with published material, the possibility obviously exists that a search judged by the IPO to be diligent fails to locate a rights holder, as has proved to be the case with similar schemes overseas.

The regulations for the domestic scheme, unlike the regulations implementing the directive, are gold-plated in that they cover photographs and unpublished material. As we all know, photographs are a very difficult area, particularly ones where metadata can be stripped off—there are many cases on record of this. We are all aware that photographers are very concerned about this regulation. The Minister helpfully drew out the legal processes that are available in such cases, but, as with all these things, I do not think that this will do the trick. We need a system that better meets the reasonable concerns of photographers. I hope that when we come to see the annual report, we will have better evidence to take on that, because there may be overclaims on both sides.

I think that the Minister accepted that unpublished material gives rise to concerns about privacy. Many of the arguments around this seem to rely on the fact that if material has been placed in a public archive that should be taken into account as a relevant consideration. I declare an interest as a former director of the British Film Institute. I know from my direct experience of the national film archive that people offering to make a deposit of material are not usually, if ever, required to declare that they are the owner of the copyright in such material, as opposed to the owner of the physical material. Indeed, the BFI experience is that the reverse is usually the case. We had a huge archive of British film and television programmes where there was no ownership of the copyright but simply ownership of the material.

If executors of an estate decide to offer a dead person’s archive of correspondence to a local authority, the deposit will probably include letters whose copyrights are the property of third parties who may never have seen the letter in question. As others have said, this all depends on how successful the scheme will be in setting a standard for “diligent search”. My noble friend Lord Howarth and the noble Lord, Lord Clement-Jones, expressed puzzlement as to exactly what role the IPO was playing in this. Again, it would be helpful if the Minister could respond on that.

The lack of any standard being set may be attributable to the fact that there will be varying standards across the varying types of material that we are talking about, but it would be helpful to have in the statutory instrument some sense of what we are looking for here. Without that, all options are open. At least Clause 43 of the digital copyright Bill required advertisement in the press as part of the “diligent search”, but that has been dropped, so far as I can see, from the regulations. So what is a “diligent”—or as the notes say in places “diligence”—search? It would be helpful to have more examples.

We have touched on exactly how much material will be exposed to orphan works licensing, particularly under the domestic scheme. The legislation when we first heard of it was being talked up as an “open sesame” to Ali Baba’s cave of treasures in which millions of works worth thousands of millions of pounds were locked up. The most recent impact assessment paints a much more sober picture of a scheme that will make a small contribution to economic growth. There may be a treasure trove of millions of orphan works which will drive economic growth, but the truth is that we simply cannot know. As most of the material seems to be either newspapers or unpublished letters and correspondence, I rather doubt it. It will of course materially assist scholars and researchers, but it is unlikely to be a huge income generator. It would be helpful if the Minister could spend some time talking about the way in which reports on this activity will be presented to us. It is clear that we need raw numbers of diligent searches; the number of revenant rights holders who have emerged; the number of licences issued; and the number of appeals to the First-tier Tribunal and the Copyright Tribunal. We also need to know what else will be available. There will be an annual report, but there was also a commitment made to Parliament at Third Reading of the Bill to review the operation of the scheme after one year. I agree with other noble Lords that this might be too soon, but I think that we should have it because it will give us more detail of what we are talking about.

I want to put on record my thanks to Mr Tom Rivers who has helped with briefing for this debate. He mentioned to me in passing that he had spotted some infelicitous drafting in the regulations. Can the Minister indicate whether that was picked up in the final versions?

Finally, I turn to the commencement date. The regulations state that they will come into force on 29 October 2014; that is, in six days’ time. Clearly, the EU directive requires the EU scheme to be implemented on or before that date—which I presume is why the date is stated—but since we must have known that for at least five, if not 10, years, I wonder why the regulations were not readied in time for one of the common commencement dates, either 6 April or 1 October.

According to the better regulation framework guidance for officials, which I have already quoted in similar debates, the new,

“domestic measures (both regulatory and deregulatory) must come into force on a common commencement date—either 6 April or 1 October”.

It does seem to me that the business department, of all government departments and agencies, should reflect the guidance to officials which says:

“By requiring regulatory changes to occur at set times, Common Commencement Dates (CCDs) inform business and other stakeholders about forthcoming regulatory changes, helping them to plan and budget for new measures and to minimise any additional costs”.

That seems to be a good approach. Why did it not happen in this case?

My Lords, I thank noble Lords for their valuable contributions and comments. We always have lively debates on these intellectual property issues, partly because of the balance that one has to try to strike on the whole series of measures we have taken.

The noble Lord, Lord Howarth, welcomed the EU directive, as did I, and I in turn welcome the work he has done with the British Library. He is of course the noble Lord, Lord Howarth of Newport, which is where the Intellectual Property Office is located, so he is a friend for that reason as well. It was also good to hear of the interests of my noble friend Lord Bridgeman, who introduced a family perspective into this debate to complement and assist the perspective of national collections such as the British Library.

The noble Lord, Lord Howarth, argued that the scheme did not meet the needs of museums and that the balance was wrong. Clearly, I respect his view, but I disagree. We must protect copyright owners as well as the cultural sector, which was a point made by the noble and learned Lord, Lord Scott.

The noble Lord, Lord Howarth, also felt that the UK scheme was bureaucratic and expensive. As he said, I care a lot about regulation and bureaucracy and will be keeping a beady eye on this. As we have heard, there are views on both sides. As my noble friend Lady Buscombe said, we are slightly between a rock and a hard place. We have to find a balance and move forward on these important intellectual property issues. There were many years of debate when little was done, and it is good that we have moved forward in recent times. We now have a policy on orphan works coming into effect.

We are mindful of the need to make the scheme affordable to cultural institutions. We have developed the orphan works licensing scheme, including the approach to pricing, in consultation with museums, libraries and archives. However, the needs of potential users of orphan works need to be balanced with the rights of copyright holders.

The noble Lord, Lord Howarth, also argued that the diligent search requirements were onerous. I will come on to talk about those in a little more detail in view of the other points that were raised, but I say at this point that it is a fundamental principle of diligent search that it needs to be a diligent search for all relevant rights holders of any given work. That is only fair. Of course, many libraries, museums and archives are already doing this. The difference will be that when those searches do not result in rights holders being found, the search will not have been wasted.

Of course, the EU directive covered only the heritage and cultural orphan works, not commercial works. The UK scheme also covers a broader field than the original EU directive. Despite our efforts to make the directive wider during its negotiations, it does not allow us to regulate commercial use. That also partly answers the question of the noble Lord, Lord Stevenson, about why we had to have two statutory instruments, one under Section 2(2) and the other under domestic legislation, but we are of course debating them together.

The noble Lord, Lord Howarth, asked about licence fees. He said that if you multiply a minimal fee by millions of works, you get large sums.

To go back to diligent search, if I am picking this up correctly from what the noble Baroness has said, the irony will be that the position in the order reflecting the incorporation of the EU measure has got specified minimum requirements for a diligent search, but there are no such requirements in respect of the commercial work. That is, I think, the cause of the unease that we all feel. Does she not recognise that unless a similar or even greater level of scrutiny is required, the danger will always be in the minds of the rights holders that they are not being dealt with fairly in the domestic issues?

I thank the noble Lord for his intervention. I think in fact that is not right. There will be rules for diligent search and indeed we have published guidelines on diligent search, which I am very happy to make available to the Committee. For exactly this reason, we are very aware of the interplay between the two schemes and that is something that we have been concentrating on during the extensive period of implementation and thinking about exactly how to implement this.

I would say that licence fees are not a tax. They are the price owed to the copyright holder. It is fair to pay for this, given that copyright is, in a sense, a property right, as has been said.

If the copyright holder does not turn up, why would the money not go back to the institution that has paid for a licence fee? After all, the institution is incurring the costs of conservation, cataloguing—all the overhead costs of preserving these orphan works—and it seems that it would be a more fruitful use of the money to let it rest with or return to the cultural organisation rather than simply be pocketed by the IPO and BIS.

I will come on to address that point, if I may. I thank the noble Lord for repeating it.

Going back to the other points made by the noble Lord, Lord Howarth, he talked about mass digitisation and blanket licensing because that, obviously, would help museums. In respect of the impact assessment, the non-commercial licence covers all non-commercial uses of a single work. The scheme is not intended for mass digitisation, as I think he knows, because it is only fair to search for all rights holders. He mentioned the review after a year. Of course, I hope I will be around on one side of the House or the other to assist in that review. Finally, he argued that we should consider an insurance approach. I am afraid that the insurance approach would not be lawful under EU law and there is no power provided under the Enterprise and Regulatory Reform Act, as I understand it, for that option.

The noble and learned Lord, Lord Scott, rightly talked about the property rights underlying copyright and the expropriation of property that could be at risk. I agree that the verification has to be proportionate.

The noble Lord, Lord Clement-Jones, raised a number of points. Perhaps I could take some of them in turn. He asked about the contribution to growth. We believe that a modest contribution to growth is likely. The estimates in the impact assessment are based on licensing twice the number of works in the Canadian scheme, which licensed 12,000 works. This is because we have roughly twice the population of Canada. That scheme covers unpublished works; our scheme covers unpublished works. Of course, our cultural, heritage and creative sectors are, happily, larger than Canada’s. Ours will be an online process, which I hope will be more efficient. The consultation respondents such as the CBI suggested that benefits are expected but they were not able to quantify them at this stage. The IPO’s running costs are, we believe, likely to be in the range estimated in the impact assessment and not too low for those reasons.

The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Buscombe, asked about the diligent search process—I think that was the main thing that people were concerned about. I have already referred to the guidance, which is available. It is right that the main burden of diligent search is borne by the user and not the state. We are taking a proportionate approach, asking not just about where applicants have searched but what the results were, where they found the work and why they want to use it, as well as having the ability to ask to see evidence of that search.

The noble Lord, Lord Clement-Jones, wondered why details of the searches could not be available for us all to see. Again, we have to be proportionate. Details could include the personal addresses of the descendants or the creator. Publishing such data about individuals is not justified as a default option. It would be a bit like demanding to see passport applications in full in case your identity was being stolen. However, the registry of orphan works will contain sufficient details for a rights holder to check. Search technologies—this was another question—are set out in the diligent search guidance that was drawn up with stakeholders. Electronic means are not useful if the work has not been digitised, which may often be the case with old works.

My noble friend Lady Buscombe asked if we could explain a bit more about what reasonable and diligent research represents. I can do no more than send her a copy of the booklets that have been prepared by the IPO—very good booklets, in my opinion. I was asked whether, if the diligent search is not up to standard or where there is a deliberate or negligent misidentification by the applicant, no licence will be issued. That carries its own penalty; the time and cost of making the application will have been wasted, so there is a penalty of that kind. Someone with a history of poor diligent searches would be more likely to be asked for additional evidence by the IPO.

My noble friend Lord Clement-Jones went on to ask about oversight so that we can check that the IPO is acting properly—a key question. As IP Minister, I will be accountable to Parliament for the running of the scheme as a whole. The IPO must produce an annual report under Regulation 11, as we have discussed, and at a minimum that has to set out the total revenue from licences, the total costs of running the scheme, the number of rights holders who have emerged and the payments made to them, and it may be that there is scope for putting extra things into that report. As a public body, the IPO is subject to all the usual controls, including oversight by the NAO and standards of public conduct, so it is a good home for this function. In any event there needs to be a balance in this whole area, as I think the different views expressed show.

The noble Lord, Lord Clement-Jones, queried how long a rights holder had to check the register once an application had been made. Rights holders should not need to do this; a diligent search will find them in most cases. If the rights holder chooses to monitor the orphan works register, they will see the applications as they are received. They could come forward when the application was being considered. The noble Lord will know that Canada does not operate a waiting period. Indeed, some things need to be done quite quickly; if, for example, you are a television company seeking to use one of these works, you do not want to be bogged down in bureaucracy.

I turn to licences and when they might be transferable. Orphan works’ licences will not be fully transferable. The IPO can allow a licence to be transferred if there are compelling reasons to do so—possibly, for example, where a business that owns the licence has been taken over. On the question of what safeguards photographers have against the stripping of metadata, I repeat that this is a general problem and not caused by this licensing scheme. The voluntary code of practice on metadata was published only last year. Therefore, unfortunately, we do not have information on its voluntary uptake. However, diligent search and information on the provenance of the work will help to ensure that only genuine orphan works are licensed. Photographs licensed under the scheme are likely to be older works held in archives, often created by non-professionals, rather than professional works being exploited by the creator.

Lastly, my noble friend Lord Clement-Jones asked whether remuneration could be claimed during the renewal period and whether the renewal will ever be for more than seven years. The renewal of an orphan work’s licence will be limited to a maximum of a further seven-year period. Where a licence is renewed, a further licence fee will be payable. This will be held for the rights holder in the same way as in the initial fee. To answer another question that was asked—and I made this clear in my own opening remarks—if there are surpluses, they are allocated for heritage, cultural and educational use.

I think that I have largely responded to the concern of the noble Lord, Lord Stevenson, about whether there should be one scheme, but I have not answered the question of why we have an order coming in on 29 October without fuller warning. Obviously, the EU directive needs to come in on 29 October, which I think he accepts. We believe that having the UK and EU schemes coming in on the same date helps to avoid confusion. There has been extensive consultation with stakeholders. The last consultation paper was published in January 2014. As he will know, the common commencement date does not apply inflexibly to the implementation of directives, although he will also know that I am very keen on common implementation dates. I share his concern but it seems right not to use it on this one. The Government have already made it clear that they will review the scheme after 12 months. I have talked a little bit about what that could and might cover.

The noble Lord, Lord Stevenson, asked about unclaimed fees. Under the EU scheme there is no payment in advance, so there is no issue. However, under our scheme they will be kept by the IPO for eight years and then used to the fund the scheme. As I have said, any surplus will go to cultural or heritage uses. The noble Lord also argued that we should stop a licence immediately when an orphan work reappeared. That would create an undue element of business uncertainty. The process that we have developed is a better way forward.

To conclude, we will have an annual report, which we can of course debate. We are committed to a review at the end of 2015. I appreciate the range of views on this issue. Some argue that we have been too strict in protecting the creators; others say we have done too much to help our cultural institutions. As I said at the beginning, I believe we have found a good balance between the many interests. On that basis, I commend these regulations to the Committee.

Motion agreed.