Considered in Grand Committee
My Lords, the regulations were laid before the House on 19 December 2018.
Copyright law is largely harmonised internationally by a series of multilateral treaties, to which the UK and most other countries are party. Our membership of these treaties does not depend on our relationship with the EU and ensures that, in all scenarios after exit, UK copyright works will continue to receive protection around the world. Conversely, foreign works will continue to receive protection in the UK. However, there is a body of EU law on copyright that goes beyond the provisions of these international agreements. This has introduced EU-only rights—such as the sui generis database right, which provides EU-wide protection for EU database creators—and arrangements that facilitate the use of copyright content in cross-border services, such as the copyright country-of-origin principle, under which satellite broadcasters transmitting films and other copyright-protected works across the EU need permission from the copyright owner only for the state in which a broadcast originates, rather than in every state in which it is received.
A significant portion of UK copyright legislation derives from the EU copyright acquis and therefore includes references to the EU and member states. Without amendment, many of these references would become inappropriate after exit, either because they presuppose the UK’s membership of the EU and will not make sense once we are no longer a member state, or because they implement EU cross-border copyright mechanisms that, in a no-deal scenario, will become inoperable.
For those reasons we are introducing this instrument. In broad terms, it will preserve, where possible and appropriate, existing arrangements in UK copyright legislation by making minor, correcting amendments. The only exceptions to this principle of continuity arise in our implementation of some of the EU cross-border copyright mechanisms. It is unavoidable that the reciprocal element of these mechanisms between the EU and UK will become inoperable in a no-deal scenario, because they depend on reciprocal provisions that apply only between member states. This SI therefore amends our implementation of these mechanisms.
In some cases, it is appropriate to continue to extend a cross-border provision to the EU on a unilateral basis, because providing continuity in this way benefits UK consumers or businesses. This is the case for the country-of-origin principle in satellite broadcasting, where maintaining the effect of existing law will support UK consumers’ continued access to foreign television programming. For other mechanisms, providing continuity would be detrimental to those in the UK: for example, to continue to provide database rights for EU creators without reciprocal action by the EU would put UK businesses at a competitive disadvantage. This instrument will restrict those mechanisms to operate on a purely domestic basis, or bring them to an end, as appropriate.
We know that there are concerns over lack of consultation, and I would like to offer assurances that we engaged with affected stakeholders as far as possible within the constraints. There is no question that formal consultations are an important part of the process of engagement, but they are not the only part. We have regularly engaged with and listened to the concerns of stakeholders from across the creative and digital industries on an informal basis since the referendum. This engagement has given us a sound basis from which to prepare these regulations, and we are grateful to all those who have shared their views on copyright and EU exit.
In support of this instrument, we have published three impact assessments, each of which has been green-rated by the independent Regulatory Policy Committee. Those correspond to three of the most significant cross-border mechanisms: sui generis database rights; the copyright country-of-origin principle; and cross-border portability of online content services, which allows EU consumers to access their online streaming or rental services as if they are at home when they visit another member state.
Both the Secondary Legislation Scrutiny Committee and the European Statutory Instruments Committee commented that those assessments did not provide sufficient detail on the impacts of no deal on UK stakeholders. The reason is the same in each case: impacts on UK consumers, rights holders and broadcasters will result from the UK being treated as a third country in a no-deal scenario—not from these regulations, which amend the UK’s implementation of the cross-border provisions and will primarily affect EU rights holders, consumers and broadcasters.
In line with the better regulation framework, the impact assessments consider the effects of this instrument, and not the impacts that arise from the legislation of other countries and which we cannot avoid in a no-deal situation. However, we recognise that these impacts exist and that UK stakeholders will need to be aware of them. That is why the Government published in November 2018 a long-term economic analysis of the impacts of leaving the EU, and detailed guidance on what a no-deal Brexit would mean for copyright and related rights. That gives consumers, rights holders, businesses and other organisations the information that they need, in plain English, to make informed preparations for all outcomes.
These regulations will provide certainty, clarity and, as far as possible, continuity for UK businesses, rights holders and consumers as we leave the EU. I commend them to the Committee.
My Lords, I am delighted that this statutory instrument is being considered as an affirmative one, which is probably all my fault as I wrote to the relevant committee on 1 November setting out my interest in the subject and why I believed that it should be discussed. My interest dates back to having been an MEP and MP, and I spent time as a stagiaire in DG IV—as it then was—of the EU Commission, although I was concerned more with anti-trust at that time than intellectual property.
I would like to press the Minister on three separate issues, although he will be pleased to know that I am not against the statutory instrument in any shape or form. We are obviously helped by the findings of the two committees, for which I think that this Committee will be grateful. The report of the Secondary Legislation Scrutiny Committee mentions, as one reason why it was critical and thought that the House would benefit from such discussion, the assessment of the impact of the loss of the reciprocities. The Minister referred to that. As UK consumers while in another member state, we were going to lose the right to benefit from Netflix—if we only knew how to do it, of course—but visitors from another member state to this country would continue to benefit.
I understand the conclusion that the Government have drawn. However, given the extensive range of copyright issues covered in this instrument and that it seeks to establish reciprocity in relation to the loss of free access to portable online content services for consumers, how did the department reach that decision without having made an assessment of the impact of that loss on UK consumers?
We have heard from the Minister this afternoon that there has been a broad and general paper, from which I am sure that we will all benefit, but what was the basis for reaching the decision? Has he had any discussions with Ministers of other member states to see whether, having given up reciprocity, there is any way we might revert to it in future when we are negotiating a deal? Is that lost for ever, or is it only in the context of the no-deal statutory instrument before us today?
How wide an impact assessment has the department done in preparing for this statutory instrument? Do we know either how many UK-based broadcasters will be affected, how the loss of portability of online content may impact on UK consumers or how much the facility has been used in the past? From my experience, if you are visiting Brussels in the capacity of an MEP or as a lawyer, I frankly do not think that you would have much time to watch Netflix—I see that the shadow Minister disagrees. However, if you are there on holiday, it would obviously have a greater impact. The conclusion reached by the Secondary Legislation Scrutiny Committee Sub-Committee B is that it would have been helpful to provide more information, if the department has it, on the potential impact of EU exit on both UK businesses and consumers in this area.
We are apparently seeking to preserve the UK’s compliance with the requirements of the Marrakesh treaty—where these treaties are drafted and signed seems ever more exotic. I understand that we are seeking to ratify the treaty in our own right. Does my noble friend have a proposed timetable for that? We have learnt from other departments that ratifications of treaties and deals are not quite as straightforward as we might believe. I should be grateful for a response to those questions as well as to my overall question as to whether we are seeking reciprocity in the long term through a deal.
My Lords, the noble Baroness, Lady McIntosh, has asked some very pertinent questions which I certainly want to reinforce, and I look forward to what the Minister has to say in response. This is a deceptively short SI, but it deals with a rather large number of important rights, both for business and for the consumer. Even though I agree with the committee that it would have been helpful to provide more information on the potential impact of EU exit on UK businesses and consumers in these areas, at least the impact assessment set out the general impact in broad terms. The Minister used the word “unavoidable”. Sadly, I do not think that there are any alternative solutions to the issues set out in the statutory instrument.
What does the Minister consider to be the actual impact? As with all the SI impact statements, the assessment for this one says that, pretty much, the only impacts are a result not of the SI but of leaving the EU, becoming a third country and so on. However, there are substantial impacts as a result of consumers not having such rights and broadcast businesses not having the rights under the cable and satellite directive. Indeed, business has a double whammy because, as was discussed on 6 February, under the AVMS directive—as my noble friend Lord Foster pointed out, it deals not so much with copyright as with regulation—broadcasters will have a real problem in terms of the country of origin and regulation. So it is not just copyright and clearance issues that will add to the burden of cost; it is the certainty of regulation. It is no wonder that, already, a large number of broadcasters that broadcast into the European Union and have relied on the country-of-origin principle are upping sticks and moving to places such as Amsterdam.
At least for the AVMS directive there is some consolation in the Council of Europe regulations, but for a more limited range of material. Unless the Minister can correct me, I do not believe that there are any consolations on copyright clearance for broadcasters. This really is damaging.
I noted what the Minister said on consultation, and we have had endless discussions about the level of consultation. He said that the IPO had engaged with affected stakeholders, but I am very interested to know who he has managed to talk to, especially on the consumer side.
The portability aspect is a new right. It was rather treasured by many consumers, I think, and now it is being taken away. The noble Baroness, Lady McIntosh, was absolutely right to ask the question she did. Perhaps I am looking for unicorns but, if we were negotiating with the EU post Brexit, would we be seeking to reinstate portability? As I said, it is a treasured right that was introduced after a large number of years by a very effective EU Commissioner.
I also support the noble Baroness, Lady McIntosh, in wondering when the Marrakesh treaty will be ratified. Obviously that is of considerable importance for that particular right. Again, it was hard-fought for and is very important for those who are disadvantaged. Perhaps the Minister could give us a timescale within which it is proposed to do that.
I hope I have covered all the points, but perhaps the Minister can give some indication as to what he thinks the real cost is. I do not know whether the overarching impact assessment given by the Government gets into that kind of detail—I doubt it very much. No doubt the Minister has all the facts at his disposal.
My Lords, I thank the Minister for his introduction. We broadly accept the position of the department. However, as the noble Baroness, Lady McIntosh, and the noble Lord, Lord Clement-Jones, have touched on, a number of issues are staring at us, both in the impact assessment and in the SI itself. I will not go through all these, because most of the main points have been picked up. However, the Minister touched on the issue of no deal and the problems associated with it. Obviously, if we were to rule out a no-deal scenario, many of the issues would be dealt with and we would not be having these conversations.
Following on from the final point of the noble Lord, Lord Clement-Jones, he will find that the answers are not within the impact assessment, especially on cost and finances. Page 2 of the first two of the three impact assessments, under the heading “Full Economic Assessment”, looks at both the costs and the benefits. In both, the first line states:
“It has not been possible to monetise the costs due to a lack of available data”.
Unfortunately, I do not think there will be detailed answers on the costs, whether to the consumers or to the industry, because of the lack of available data.
That feeds into the Secondary Legislation Scrutiny Committee’s points, which, because the Minister obviously knew they were coming, I am addressing head-on. I do not think there has been a clear enough answer to them. The committee is of the view that it would have been helpful to provide more information on the potential impact of EU exit to UK businesses and consumers in these areas. That is an indictment not of the department, but of the work that has gone into finding out the impact of this.
Well, my next point is on lack of consultation. The Minister touched on this because, again, he obviously saw this coming down the line. There was no detail in the statement about the stakeholders. In fact, there was a comment—unfortunately I have not written it down—on how consultation has been ongoing since the decision was taken on Brexit. That may well the case, but the specifics of the issues around this area are really important. It would have been nice, and still would be, to get a little more detail on who the consulted stakeholders are, when they were consulted and what that consultation looked like.
I will pick up on another of the Minister’s comments. To paraphrase, he said that the general public will know about this because we have this information about the loss of reciprocity on our website. Until picking up this SI and coming here to respond on behalf of the Opposition, I was not aware—which was obviously my fault—that reciprocity would be lost following no deal or the UK’s going into a third-country situation. The idea that it is widely known that individuals will lose access to online content—whether it be Netflix, iTunes or other aspects of it—is just not correct. If we are going to end up in this situation, some information from the department to the wider British public, whether through the businesses or the organisations, would be a good thing. It would make the public aware of what was coming down the line if we ended up with no deal.
I will not pick up on all the other issues; they were covered very well by the noble Baroness and the noble Lord. I am sure the Minister will pick up on the points about the Marrakesh treaty, so I will leave it there.
I thank all noble Lords for their contributions. I will start off with consultation. At the time we were developing these regulations, we were in the early stage of negotiations. Revealing our continuity of approach through a public consultation might have risked our negotiating position, so it was not possible to conduct that full formal public consultation of the sort one would normally like. Within those constraints, the Government engaged with stakeholders in the creative and digital industries as far as possible: in August last year, officials in the department held a whole series of industry round tables to discuss no-deal planning with publishers, collective management organisations, broadcasters, technology firms, museums, archives and educational establishments. I could undoubtedly write to noble Lords and give them greater detail—for example, on the alliance for IP and the British Copyright Council, both of which are representative bodies that cover a broad range of copyright needs. I believe we engaged as far as was right and proper.
However, as the noble Lord, Lord Clement-Jones, and my noble friend Lady McIntosh, stressed, there is an impact from no deal. We did an impact assessment on these regulations and the impact is minimal, but the wider impact of leaving without a deal will be greater. We recognise that leaving the EU without a deal will lead to disruption in the field of intellectual property for the UK’s creative industries. However, in passing this instrument, we will provide continuity wherever possible and, where changes to existing arrangements are unavoidable, we will ensure that clear and appropriate legislation is in place. I believe that that will minimise, as far as possible, disruption to the creative and digital industries, whose work obviously depends on an effective intellectual property framework.
The noble Lord, Lord Clement-Jones, asked what the Government were doing to support UK broadcasters facing the loss of the AVMSD and the copyright country-of-origin principle. I assure him that it is still the Government’s intention to secure an agreement with the EU on our future relationship, and we set that out in last year’s White Paper. We want any deal to involve the best possible arrangements for the broadcasting sector. If we leave without a deal, broadcasters might face disruption due to the EU copyright country-of-origin principle ceasing to apply to the UK. Therefore, again, we sought to give broadcasters and others as much information as possible about the implications of no deal by publishing technical notices and detailed guidance on what that would mean for copyright. However, I make it clear that we will continue to seek a deal.
I also make it clear to the noble Lord and to my noble friend Lady McIntosh that we will continue to seek reciprocity. The political declaration provides a good basis on which to negotiate our future relationship with the EU on these matters. For copyright, this includes a commitment from both parties to maintain high levels of protection for database rights and artists’ resale rights. The specifics of our future relationship with the EU will obviously be the subject of those negotiations. However, as set out in the political declaration, our aim will be to make sure that the agreement continues to stimulate innovation, creativity and economic activity.
Further on reciprocity, the EU portability regulation works through reciprocal application of the cross-border rules. The regulations that we are dealing with today will not cover UK/EU travel in the event of no deal, and the UK obviously cannot replicate the effect of existing arrangements on a unilateral basis. However, keeping the portability regulation in UK law after exit would not have the same effect as an agreement on mutual cross-border portability. Instead, it would place unreciprocated and inappropriate obligations on service providers operating in the UK. Whether we can continue to agree reciprocal portability with the EU will have to be a matter for detailed negotiations. At this stage, I cannot go any further than that.
My noble friend also asked how the IPO came to this decision without an assessment of the loss of service in the UK. UK consumers of online content services might see changes in their services when they visit the EU after exit. This could range from being offered different content to having their access restricted. Ultimately, this will depend on the licences that their service providers have in place and the terms of service. That is a direct result of the UK being considered a third country under the portability regulation. Again, I stress that it is not something that we can deal with unilaterally.
My noble friend also asked about the effect on UK broadcasters. Without a deal, member states may cease to apply the country-of-origin principle to broadcasts from the UK, which will mean that UK broadcasters that transmit across the EU may need to renegotiate their licences to acquire rightholder permissions for every member state in which their broadcast is received. The issue arrives out of EU legislation; again, it is not something that we can address unilaterally.
I turn to the question which all three noble Lords asked about the ratification of the Marrakesh treaty. We are committed to making sure that people with disabilities continue to benefit from improved access to copyright-protected works. We are on track to ensure that we are able to ratify the Marrakesh treaty in our own right as soon as possible after exit. Our ratification will then need to be accepted by the World Intellectual Property Organization before we are once again considered a member of the treaty. While there is likely to be a delay between exit and the acceptance of our ratification in a no-deal scenario, we are working hard to ensure that this will be as short as possible.
There were a few more questions. The noble Lord, Lord McNicol, asked for any further information from the department explaining no-deal issues. I go back to the October 2018 guidance, which sets out in pretty clear terms what no deal means for copyright. I have a little more detail about who we consulted, but I do not think it adds anything to what I said before. I assure noble Lords that this included representatives and trade bodies from commercial broadcasters, collective management organisations, libraries and archives, tech firms, publishers, authors and photographers. I do not think I need to write with any further points. I think that deals with most, if not all, of the points raised, but I see that the noble Lord, Lord Clement-Jones, would like to come in.
My Lords, I stress—I think I made this clear—that I used the words “round table” in the plural. There were a number of round tables and I am sure matters of the sort that are coming up today were discussed. If they were not, I will certainly write to the noble Lord, but I cannot believe that they were not discussed.