The core ethos, and success, of the internet to date lies in its ability to stimulate shared ideas and content. It also promotes participation, pro-activity and creativity. But there is a tension between providing reasonable rewards for creativity, which have historically required a measure of protection for the creator’s rights, and the freedom to allow that content to be used to permit further innovation and creativity. In the new digital world, the ability to share content legally, becomes ever more important and necessary. Traditional mechanisms to identify rights-holders and acquire legal consent to share often need radical updating to meet the near-instant demands of this new world. There is a clear and unambiguous distinction between the legal and illegal sharing of content which we must urgently address. But, we need to do so in a way that recognises that when there is very widespread behaviour and social acceptability of such behaviour that is at odds with the rules, then the rules, the business models that the rules have underpinned and the behaviour itself may all need to change.
Across both old and new media, if we have an ambition to be the leading international destination for creative businesses, we need to combine an environment where opportunities abound for rights holders and digital distributors to develop exciting new ways to package and sell the content that people want. It must have a digital content protection framework in which such international businesses can have confidence. This will be increasingly vital in a Digital Britain where everyone has access to video capable broadband and many have access to much higher bandwidths. We must make sure that together we address the threats. But at the same time we must not lose sight of the fact that a truly broadband Britain promises huge opportunities for digital content producers.
The Intellectual Property Office (IPO). The Intellectual Property Office has launched a debate on the future of copyright building on the recommendations of the Gowers Review, which we will consider as part of our final report. This work aims to build a long term vision for copyright, considering what changes may be required domestically, at EU level and internationally. Although the IPO’s work is not limited to digital issues, most of the key issues are highly relevant to the digital environment.
Copyright is vital for our content and communications industries. It is the framework through which people can protect their creations and seek reward. Our aim, in the rapidly changing digital world is a framework that is effective and enforceable, both nationally and across borders. But it must be one which also allows for innovation in platforms, devices and applications that make use of content and that respond to consumers’ desire to access content in the time and manner they want, allowing them to use it how they want, and at a price they are willing to pay.
Already the UK has achieved a world-first in this regard: the Memorandum of Understanding between the Internet Service Providers (ISPs) and rights holders to tackle unlawful file-sharing by consumers – it has shown that these two groups with very different agendas can engage in an intelligent conversation about how to secure action in respect of legal offerings, education and enforcement. We need to ensure that all the work, and the increased understanding it has engendered, is not wasted. Quite apart from the specific work on unlawful file-sharing we need to make sure that there continues to be a space where different interests can come together and talk. If that helps develop new legitimate offerings (being careful to avoid any possibility of anything anti-competitive being discussed) then that is something that Government should be willing to facilitate. It’s clearly for industry to do the commercial deals – but Government should smooth the path where it can.
Of course much of the digital content sector still depends on non-digital and long-established business models for the bulk of its revenue, and we should not pretend that adapting to a digital environment will be easy or simple. But there can be little doubt about where the future lies, as an increasing range of content becomes digitised, for example e-books becoming part of the mainstream. What worked in the physical world will often not work online, and rights holders must find new partners, and new ways of creating value from their Intellectual Property.
We need to support rights holders as they adapt their way of thinking and working. This is not to support business models that will become increasingly obsolete, and nor do we want to try and pick the new business model – in any case there will almost certainly be many competing ones. But we should look at the environment within which they operate, and for rights holders that means the sea of unlawful activity within which they have to swim.
As well as the Government support for rights holders we need to acknowledge the issues which their customers are raising. Businesses need to understand the best ways of responding to the changing demands and behaviour of potential customers, winning their trust and securing income. Winning the trust of customers will be vital to the success of the sector as it finds a way to seize the opportunities the internet has to offer.
An effective enforcement framework must address both criminal and civil law infringements. In terms of criminal enforcement the Government is already taking a leading role, one that is recognised internationally. Since the launch of the National IP Crime Strategy in 2004 we have continued to increase our capability to rise to the challenges of criminal piracy. The Intellectual Property Office sits at the core of this initiative, leading a co-ordinated response to improve awareness and expertise on IP crime issues within our enforcement agencies and facilitating the sharing of best practice and intelligence. The Creative Britain Report published in February 2008 heralded the creation of a new National Centre for IP Crime to help drive further improvements – which will be up and running later this year. The benefits of this co-ordinated approach are recognised internationally.
More directly, funding has been provided to help trading standards officers tackle IP crime at the local level. In 2008 this funding was over £7million with similar funding for 2009 and 2010. This work is delivering real results.
But it is not only criminal scale copying that poses a threat to our digital future. The copying and sharing of content online has become a commonplace activity for many consumers. Where such activity is unlawful, the tackling of such infringement raises clear challenges, both in terms of the scale of such activity and in the kinds of responses that may be appropriate in respect of individual consumers. We must rise to this challenge and consider what role there is for government in helping industry to address civil infringement in the online world.
The copying of content without permission by consumers is not new – it’s been an unwanted companion of creative goods for as long as there have been means of copying material without paying. In the analogue world, though, it is a manageable problem, both in the control of such copies and in terms of consumer demand: there is usually a detectable deterioration of quality – video tapes were never as good as the original, and taping music from vinyl or the radio was a poor substitute. The digital world changes all that: copies are near-perfect and can be shared widely with the online community. Entirely legitimate technologies such as file-sharing can be abused such that millions of people can access material, unlawfully but for free.
This has led to a fundamental change in consumer expectations, particularly among the young. There is now a growing expectation that content can be found and shared for free. There is a corresponding resistance to paying for content, or accepting that an inability to pay means an inability to access the content. The collective impact of small scale individual infringement is considered to be significant while recourse for such infringement is delivered through individual civil court actions which can be costly and time consuming for the rights holder and which are perceived as disproportionate by consumers. This has affected different sectors to different extents; music is most exposed. Film, games, broadcasters and the publishing industry are also increasingly being affected. Indeed, it is a phenomenon all the digital content sectors will have to face sooner or later.
It is clearly in the interests of rights holders to produce the creative products that people actively want to buy in the way they want to buy them, and to ensure people are educated about how digital products can be used and why there may be limitations, we also need to work together to find ways to prevent such infringement and to enable action to be taken against those who insist on infringing copyright. If, we expect the whole value chain to benefit from new ways legitimate content can be accessed and consumed then it is reasonable to expect the whole value chain to work together to tackle unlawful activity.
What will help to deter copyright infringement online by consumers in both the short and longer term is a combination of things. A strong message is needed about the importance of respecting copyright as a necessary part of creating new high quality content. There must be a more intelligent and nuanced appeal to what consumers value – the on-going availability of compelling content.
This needs to be backed up by a substantially higher chance of repeat infringers getting caught. The University of Hertfordshire[2] research into attitudes towards music and copyright by young people showed that only 10% of those surveyed are currently deterred from file-sharing by a fear of being caught. The current approach to civil enforcement is not working as well as it needs to. This may be due to a lack of resource – although many rights holders assign significant sums to tackling copyright infringement. The issue may be one of spending more but it may also be one of working smarter. While there is little if any evidence that the remedies against infringement are themselves outdated, the processes by which those remedies can be reached are the product of the analogue age. They need up-dating to be workable in a digital world; and to enable new business models to get enough financial air to breathe and survive. [2. 42% of those surveyed admitted to uploading. Of the 68% who did not, only 15% said this was because of the fear of being caught. www.ukmusic.org/cms/uploads/files/UoH%20Reseach%202008.pdf]
Perhaps most importantly the availability of legal content in the forms that consumers want is crucial. In the short and long term, the rights holders must find the innovations that once again enable them and their customers to respect each other’s point of view. These are businesses where the customers and content creators alike have been used to paying for and rewarding emotional commitment, enjoyment and admiration. This has been an historic strength and one that businesses need successfully to innovate to recover.
ACTION 11
By the time the final Digital Britain report is published the Government will have explored with interested parties the potential for a Rights Agency to bring industry together to agree how to provide incentives for legal use of copyright material; work together to prevent unlawful use by consumers which infringes civil copyright law; and enable technical copyright-support solutions that work for both consumers and content creators. The Government also welcomes other suggestions on how these objectives should be achieved.
Such an approach would need rights-holders and distributors of all digital material (e.g. music, film, television and radio, software, computer games, e-books) to work together to develop ways of making this kind of piracy more difficult to do and easier to trace and prevent. This could involve working with authorities in other countries to act against damaging sources of infringing material. It could also include the exploration of new technical approaches to the content itself or its transmission, including common standards.
This body could carry on the work started by the Memorandum of Understanding on unlawful file-sharing. It should provide the forum within which all elements in the value chain – content creators, initial aggregators (e.g. studios or broadcasters), theatrical distributors (e.g. cinema chains), networks, ISPs and other parts of the chain – could come together. Within the boundaries of competition law, this could lead to the development of models that provide incentives for all for legitimate downloading and use, a framework of common responsibility to discourage and prevent illicit use, and to support and legitimise technical solutions that can achieve both. Developing new business models is primarily for industry to do, not for Government or any new body. But working together on enforcement and education mean there needs to be clear advantages to all sides – a win/win/win for rights holders, intermediaries and consumers. Rights holders and intermediaries should each reap the economic benefits of delivering a better service to consumers.
Possible technical solutions. Automated Content Access Protocol is one example of a technical solution. Digital Rights Management (DRM), properly applied, also has a role (i.e. where it allows users to access content on any device that they own, rather than being device limited – which is the paradigm that the film industry has encouraged and one that, in music, Apple’s iTunes has now embraced, in a welcome recent co-operation between rights-owners and a device/ distributor). Both can work when they are technical-enabling solutions that match market trends and go with the grain of the market and legitimate consumer demand. But they have yet to command the assent, let alone active support, of all the necessary players along the internet value-chain.
It may be that such an independent, objective body may be better able to surmount the mutual tension between rights-holders, publishers, search engines and other content aggregators, the ISPs and the underlying communications network operators and instead broker technical solutions that can command widespread adoption and support. We also recognise that, while industry co-operation should be at the core of this, such a ‘Rights Agency’ may need to have the power to act to ensure that enforcement measures are effective and proportionate.
If the UK can develop such a working forum, we will have an advantage over most other countries.
Action 12
Before the full Digital Britain Report is published we will explore with both distributors and rights-holders their willingness to fund, through a modest and proportionate contribution, such a new approach to civil enforcement of copyright within the legal frameworks applying to electronic commerce, copyright, data protection and privacy to facilitate and co-ordinate an industry response to this challenge. It will be important to ensure that this approach covers the need for innovative legitimate services to meet consumer demand, and education and information activity to educate consumers in fair and appropriate uses of copyrighted material as well as enforcement and prevention work.
The Government also recognises that there is a more specific problem that needs addressing on unlawful file-sharing, where we have been clear in the Creative Britain paper and elsewhere that we would legislate if necessary.
The consultation on how we might tackle this issue closed at the end of October. We have today published a Response to that consultation which can be found on the BERR website, which sets out our analysis of the responses and how we intend to proceed. None of the options highlighted in the consultation attracted widespread support. Rather there was a marked polarisation of views between the rights holder community, consumers and the ISPs over what action should be taken.
A number of key issues were identified by respondents including copyright protection, protections afforded under eCommerce legislation and the impact on the wider economy. Consumers (individuals and consumer organisations) in particular highlighted concerns over data protection and privacy. The role of technology was addressed by most respondents but there were conflicting views as to whether it could offer all or part of any solution. For almost all the options, questions were raised as to their legality under the existing legal frameworks and again, views varied.
Our preferred option of co-regulation did not attract widespread support. The key problem highlighted was the lack of certainty over the nature of the obligation on ISPs and the resulting legal uncertainty this would create for all parties. There remained major concerns how consumer protection would be properly addressed, while developing the self-regulatory aspect through a code of practice raised significant questions on how to accommodate other rights holders, the smaller ISPs and consumer bodies. This was borne out by the experience of the current Memorandum of Understanding group which showed that despite the best endeavours of all concerned, reaching voluntary agreement where there is little perceived common interest between the various participants is extremely hard.
There was, however, a degree of consensus that any solution must involve the provision of new legal sources of attractive content, and that there is a need for education on the importance of copyright in the wider economy.
ACTION 13
Our response to the consultation on peer-to-peer file sharing sets out our intention to legislate, requiring ISPs to notify alleged infringers of rights (subject to reasonable levels of proof from rights- holders) that their conduct is unlawful. We also intend to require ISPs to collect anonymised information on serious repeat infringers (derived from their notification activities), to be made available to rights-holders together with personal details on receipt of a court order. We intend to consult on this approach shortly, setting out our proposals in detail.
This should provide a good evidence base, to make it significantly easier for rights-holders to take targeted legal action against the most significant infringers. International experience of action of this sort suggests that more than two thirds of infringers change their behaviour when receiving notification. These obligations will form the central elements of a Code on unlawful file-sharing which Industry would be required to have in place, supported by backstop powers overseen by Ofcom. The Code would cover among other issues practical supporting measures, including appeals and standards of evidence. It would also cover cost-sharing.
We think the concept of a new Rights Agency and legislative action aimed specifically at addressing unlawful peer-to-peer file-sharing could be major steps forward. But this is new and difficult territory, and we want to get it right. So we will review the impact of any new measures, and will not hesitate to examine other options if these do not prove to be effective.
Annex A: a straw man and key questions
This discussion paper takes the form of a straw man and builds on the proposals contained in the Digital Britain Interim Report (DBIR) and looks at the role that a rights agency might play in addressing some of those issues. It looks at particular aspects of a rights agency, outlines how they might work, and then suggests the key questions that need to be considered. Inevitably some of the answers will be dependent on what decisions are subsequently taken, including those on structure and how the regulatory aspects will work, but we hope that this paper will be a starting point for that discussion.
1. It is important that the proposals for an agency are seen as interlinked with the legislative proposals on P2P, with both forming part of an integrated solution. The role and strength of any agency could have a significant impact on how far-reaching the legislation on P2P needs to be when finally settled. If the agency creates a strong self-regulatory model with real commitment from rights holders to make content more accessible and real obligations on ISPs to take action to prevent piracy then a relatively light touch legislative approach might be all that is needed. But if the agency looks like a co- operative model but without the strength to draft and enforce compliance with codes to deliver a significant reduction in piracy then the P2P legislation might need to be specific on many points that we might otherwise be able to leave to the agency.
2. The DBIR set out two actions in relation to a proposed rights agency which may play some part in addressing these issues:
Action 11 By the time the final Digital Britain report is published the Government will have explored with interested parties the potential for a Rights Agency to bring industry together to agree how to provide incentives for legal use of copyright material; work together to prevent unlawful use by consumers which infringes civil copyright law; and enable technical copyright-support solutions that work for both consumers and content creators. The Government also welcomes other suggestions on how these objectives should be achieved.
And
Action 12 Before the full Digital Britain Report is published we will explore with both distributors and rights-holders their willingness to fund, through a modest and proportionate contribution, such a new approach to civil enforcement of copyright within the legal frameworks applying to electronic commerce, copyright, data protection and privacy to facilitate and co-ordinate an industry response to this challenge. It will be important to ensure that this approach covers the need for innovative legitimate services to meet consumer demand, and education and information activity to educate consumers in fair and appropriate uses of copyrighted material as well as enforcement and prevention work.
Why civil and not criminal issues? The DBIR suggests that a Rights Agency could take action to address the issues around civil infringement of copyright online. This excludes issues relating to criminal enforcement of copyright abuse which is covered extensively by the work of other organisations. It also explicitly excludes other issues with online content such as undesirable or illegal content.
What might the RA do?
Consumer education and information
3. In the longer term education of consumers about the damage that is done by unlawful activity, threatening the health of our creative industries, will be critical. Of course rights holders already put resource into this area, but there may be advantages to a system which minimises repetition and provides a co-ordinated approach with messages reinforcing each other. As with any initiative hoping to change behaviour, it has to be accepted that mere admonition is unlikely to be particularly effective, but it might be that a suite of approaches could be adopted, either instead of or on top of existing initiatives. If the threat is as significant as rights holders fear then significant resource should be made available.
4. It is of course primarily in the long term interest of rights holders to engender behaviour change, and accordingly it may be seen as right that they should bear the majority of the costs required to bring that change about. It must be remembered however that it is also possible that some of these initiatives could be of benefit to others, perhaps by increasing uptake of legal services offered by intermediaries, and so there may be a case for the cost to be shared more widely.
Key questions
Educational work
The majority of work in this area is currently carried out by industry associations in the music, software and audiovisual sectors with several campaigns currently either being planned or in progress. It is understood that the letter writing notification proposed in the DBIR under Action 13 may form a highly effective mechanism for these bodies to directly target the consumers in question. The Intellectual Property Office is currently engaged in work with Aardman and the Science Museum to promote understanding of all forms of IP including copyright. The IPO also carries out other work in this area, preparing materials for school use etc. The OFT has programmes to help adult learners develop consumer skills, this covers online issues.
FACT
As an example, the Federation Against Copyright Theft (FACT) is an organisation of around 70 people with funding from the Motion Picture Association of America (MPA). Fact is a Limited company and also draws some funding from accreditation fees. Companies can get FACT accreditation by fulfilling certain criteria (detailed on their website) and paying a £1,5k fee (plus vat). FACT currently has about 170 accredited companies, so its fee income from this source is approximately £250k per annum. FACT‟s work is mainly supporting the investigation and prosecution of criminal piracy, but it also carries out education and awareness work, both alone and in conjunction with other industry bodies.
Encouragement of commercial offerings
5. One of the ongoing complaints of businesses trying to develop legitimate digital content offerings is the large number of rights holders that they have to negotiate with, some of which seem (from the perspective of the would-be licensee) to have unrealistic expectations or are reluctant to enter into innovative commercial agreements. It is also the case that potential distributors can be ignorant of the range of rights that have to be secured. So, for example, ISPs may reach distribution deals with record companies, only to discover that they also need to negotiate with music publishers. This can lead to recriminations on both sides. At a minimum, some support for companies entering into this process could be useful.
6. A rights agency may be able to play a significant role here, firstly as a neutral space where different rights holders in the value chain and those who are seeking to make a deal can meet. There are obvious concerns here about ensuring that this does not amount to anti-competitive practice. However, assuming that this can be managed then it could help to facilitate new legal offerings.
Key questions
Rights clearance in other organisations
The resources need to carry out rights clearance are extensive. Take, for example, the BBC‟s on demand catch-up service, iPlayer, which was launched on 25th December 2007. The popularity of the service can be gauged by the current daily average of 1.5 million streams and downloads requested via the iPlayer.
The negotiations for the rights agreements for the BBC to run iPlayer were extremely complex. They began in 2002. Over the subsequent 5 years some 70 new agreements were reached with rights holders bodies entailing thousands of hours of rights management activity.
Rights clearance for a film can also be complicated and slow. Filmmakers report the costs of this for a single film might be of the order of £300k. Clearly then this is a resource intensive problem, and the size and cost of an agency that attempts to deal with this on a large scale should not be underestimated.
7. The points made about needing to ensure compliance with competition law are important ones. The impact of a unitary body carrying out rights clearance activities has the potential to distort the market, since an agency involved in such work would have knowledge of the negotiating positions of all parties, and as such it may be inevitable that prices become regularised, removing the competition and churn that drives new business models.
Competition Law Risks
Agreements between competitors may potentially raise competition law concerns, specifically under Chapter I of the Competition Act 1998 and/or Article 81. These provisions catch and (unless an exemption applies) prohibit agreements and concerted practices which have as their object or effect the prevention, restriction or distortion of competition to an appreciable extent. Any agreements – and the agency itself – must be designed so as not to breach the prohibitions set out in these provisions.
However, not all agreements are prohibited by competition law; an agreement will not be caught if it does not restrict competition or does not do so in an appreciable manner (for instance, where the parties to the agreement have very low market shares). Moreover, agreements caught by competition law may benefit from an exemption where, in broad terms, the agreement results in efficiencies and consumer benefits, the restrictions are indispensable to the obtaining of these benefits and there is no foreclosure effect on the market.
Any agreements between competitors will also need to be closely assessed to ensure that they comply with the merger regime. For instance, this will be relevant for the purposes of an agreement to develop consumer propositions where, for example, undertakings set up a new full function joint venture company.
Funding – if the agency is to be funded by the introduction of a modest contribution as proposed in the DBR, competition rules also need to be considered to ensure that the rates are reasonable and that the monies are distributed fairly.
Standardisation – standardisation agreements may have the effect of restricting competition where they impact upon the parties‟ freedom to develop alternative standards or products. Equally, participation in the setting of standards should be unrestricted and transparent.
Voluntary rights registration and rights fund
8. Closely associated with clearing rights is the idea of setting up a voluntary registry of rights. This could help streamline identification of rights holders and negotiations, and could lead towards setting wholesale prices for rights.
9. A voluntary registry could also help with any solution to the problem of “orphan works” – items of content that are within the term of copyright but where it is not evident who the rights holders are – resulting in those who might want to commercialise such content being reluctant to take the risk for fear of being sued by rights owners emerging at a later date. Setting up a “Rights Fund” within the agency could help form part of the solution to this issue, although it is not currently possible within existing law and would need primary legislation and possibly European legislation in order to provide a workable solution. This is an idea that will need to be considered very carefully and probably in slower time than the setting up of the rights agency. Nevertheless, the existence of the agency could be a facilitator to making progress here to the mutual benefit of rights holders and those wishing to use their material.
Legal considerations around registration of copyright
While a voluntary register of copyright may perform a useful role in easing identification of rights holders, it is important that any such register does not become de facto mandatory for rights holders in order to enjoy the benefit of their rights.
The Berne Convention is explicit that registration cannot exist as a pre-requisite of protection.
There are also issues around registration of visual works, such as photographs, which do not lend themselves well to categorisation or labelling. There is concern amongst the photographic community that a requirement to register their work would add considerable burden to artists, with no resultant increase in the protection they receive. Recent legislation in the US has attracted some criticism on these grounds.
Key questions
Guarantor of quality – a kite mark for digital content
10. There are already a huge number of content offerings, and in addition to the difference between lawful and unlawful there is massive variance in the quality of products on offer, with many stories of downloaded content bringing unwanted viruses with them, and P2P being utilised for more nefarious purposes than illicit copying. A guarantee of quality and provenance may be valuable, particularly for those less experienced online or for vulnerable groups. Digital content that is voluntarily registered could be assigned a kite mark that establishes that it comes from a reputable source, and is legally being made available.
Key questions
Self- regulatory enforcement role
11. The rights agency will be an industry owned and led body, not a new body with regulatory powers. However, it is clear that it will need to work closely with Ofcom as the regulator of the P2P legislative obligations. ISPs will be subject to the code to be developed and approved by Ofcom as part of the P2P legislation. They will not be required to join the rights agency, but they may consider that they should do so if they wish to have any influence over codes etc that may be developed by the rights agency and adopted and endorsed by Ofcom as the regulator.
12. Notifications as envisaged under the P2P legislation will inevitably lead to appeals from those who consider themselves wrongly identified. It will be important that there is a clear route for consumers to travel if they have a complaint, and while this may initially be dealt with by the ISP itself a further means of redress for unsatisfied customers could be provided either by Ofcom or potentially by the rights agency.
13. We have set out our perception of the need for a balance between the ability of the rights agency to police its own members in taking practical steps directly to prevent or reduce online copyright infringement. The role we envisage for the rights agency in this would be around the agreeing, enforcement of, and management of appeals in regard to, a code of practice designed to prevent and reduce online copyright infringement. The code itself would have to be approved by Ofcom and Annex B sets out in more detail what Ofcom would be looking to take into account in approving such a code.
Key questions
Acting as an information hub.
While the IPO already does some work in this vein for criminal copyright infringement, there are legal issues that would need to be taken into account before any agency took on such a role for civil issues. As the majority of the infringements in question will be the action of individuals, any scheme to collect or handle data on infringements would have to meet the requirements of the Data Protection Act.
Formation of an industry self-regulatory body
The formation of an industry self-regulatory body may potentially raise competition law concerns since it is likely to involve cooperation between competitors in the industry. Such cooperation may spill over into areas which raise competition law concerns under Chapter I of the Competition Act 1998 and/or Article 81 EC (both of which prohibit anti-competitive agreements) such as price fixing, the exchange of sensitive, confidential information and the raising of barriers to entry (if membership is compulsory and results in increased costs for members). However, it may be possible to address these concerns by the way in which any agency is structured or operated. For example, if the agency is to take the form of an industry self-regulatory body, there should be clear systems in place to avoid the exchange of confidential information between members, membership should be open to all market participants and the membership criteria/requirements should not be unduly restrictive. It is also necessary to consider the wider implications that the agency, and any proposals made by it, will have on behaviour in the market, and the consequences for consumers.
Tackling persistent civil infringement – a test-bed for technical measures
14. Much useful work has been undertaken by the MOU group on the technical and legal feasibility of technical measures (see Annex C). A large measure of agreement was reached on the technical issues, less so on the legal ones. A rights agency could continue to act as a neutral and independent body where discussions can take place, and where solutions can be tested against the claims of their proponents. It would be important for consumer representatives as well as technical solution providers to be involved in such tests, since it is not just their technical efficacy but their proportionality, fairness and respect for privacy that need to be established. If technical measures can be agreed that meet the requirements of both consumers and the industry partners there is a much higher chance of them being introduced without wide-spread criticism and resistance.
15. There could also be a useful role in terms of standardisation and facilitating interoperability where this can be done legitimately. For example in the area of digital rights management a rights agency could be a body which facilitates agreement about the essential information that consumers should have in order to make informed choices.
16. A further option would be for the agency to agree technical approaches to reducing repeated infringement and how and when to apply them, both within the P2P area and wider, bearing in mind that P2P may not be the primary threat in the future. We are aware that this is an issue that is of great importance to both rights holders and ISPs and provokes strong views. Although reaching an industry wide consensus on technical approaches to dealing with repeat infringement is never going to be easy, it is important to think about it in the context of the proposed legislation.
Key questions
Dispute resolution
17. With respect to P2P file-sharing cases, and entitlement to use of the kite mark, it is expected that negotiations between interested parties will resolve most issues, and lead to agreements on how content can be exploited.
18. However, there will inevitably be cases where there is a disagreement over how terms have been interpreted, or where consumers consider that they have been misled by an offering, and are looking for compensation. Of course, it will be open to either party to resolve the issue either through bilateral arbitration or through recourse to the courts, but there may be merit in including within a rights agency an alternative dispute resolution procedure to deal in particular with technical, small and/or straightforward cases.
19. We would not envisage assigning the rights agency binding legal powers – that would significantly change the nature of the body – but there may be benefits to both sides in settling disagreements quickly and without fuss or disproportionate expense.
Key questions
Representation
20. We have talked in general terms about rights holders, but of course they are not a homogenous group. While they have a common interest in the security of their Intellectual Property, there are differences in how they are represented, the structure of the industries, and the extent to which they are currently affected by infringement online. Music has had long experience of fighting this battle, while the games industry already thinks in digital rather than analogue terms, but book publishing is only recently seeing a significant uptake in eBooks. The nature of the problem for software is slightly less geared around mass consumer infringement but is no less damaging for that.
21. The way in which the different sectors are represented in the rights agency will need some thought. It is essential that it is inclusive, but it could be chaotic if all those with an interest insisted on being there. There is also a danger of late-comers wanting to unpick what has been agreed – or alternatively things being agreed that would make it more difficult for other sectors to see benefit from joining.
Key questions
What might an agency look like?
22. The agency‟s structure, legislative underpinning and cost would be dependent on its agreed aims and functions. There are a range of options for the agency. At one end of the scale it could be a very light touch organisation, acting in a similar way to the Advertising Standards Authority (i.e. an industry self-regulatory body) establishing codes and managing compliance with those codes by its members. Such a light touch agency could probably be delivered relatively cheaply, with a small staff of perhaps 10 people for around £500k per annum, and would not require legislation.
23. At the other end of the scale, the agency could be a substantial self regulatory body, working under the authority of the regulator to draft codes of practice, possibly with a function in the rights clearance field. That would require substantially more funding, perhaps a staff of around 50, realistically leading to a minimum budget of £2.5 m.
24. Although, as discussed, it is impossible to suggest how an agency might look until it is decided what role it should play, for illustrative purposes a few options are set out in Annex D.
Costs
25. It must of course be emphasised here that these costs are just estimates, and with no clear remit for an agency at this time, they are subject to substantial adjustment as work progresses. It is also worth noting that the above costs are purely those estimated as necessary to create and maintain an agency in terms of staffing, building costs etc. The estimates do not include cost of any educational campaigns, cost of legal work, or costs of rights clearance and other support activities. As such the real cost to industry is not something that can be easily estimated at this time.
Key questions
How could it be funded?
26. The rights agency will be funded by industry contributions. However, our clear starting point is that costs would need to be shared between the different parts of industry. This applies both to the costs of running any agency but also to the costs of any action taken by, or required of its members by, the agency. This approach is about finding a shared solution to a problem and it would be neither feasible nor fair to load all the costs onto one set of participants.
Key questions
For comparison – Cost of Civil Actions
To bring a civil claim for infringement of copyright is a complicated process, during which it is necessary to establish:
(a) the work which is the subject of the claim is a work in which copyright subsists;
(b) the claimant is the owner of the copyright or a licensee of the owner;
(c) the identity of the defendant (the fact that a particular internet address has been used will probably not be enough to do this given the possibility of wireless connections to that address); (d) that the defendant has done something that amounts to an infringement of copyright (the act falls within section 16(1) of the Copyright Designs and Patents Act 1988, the act is done without licence (s.16(2)) and no exception applies.)
To identify an infringer might well require examination of computers. There are considerable difficulties in identifying downloaders where, for example, illegal downloading has occurred at an internet café or other area where there is public access. In the P2P area for example, infringement is established on the basis of identifying the IP address of uploaders, not downloaders.
As a result of this the cost of bringing action can run into thousands of pounds very quickly, with estimates in the region of £6k-£10k having been quoted at various times by rights holders.
How do we move forwards with this work?
27. This paper is intended to start the discussion about how such a rights agency might work. We intend to hold a public discussion forum to address these questions, but in the interests of rapid progress we would also very much welcome comments from interested parties at any time. Please send comments to DBR@ipo.gov.uk preferably by 30th March 2009 (we understand this is a very short response period, but stakeholders will appreciate the need to make rapid progress on this issue). While we will ensure that we take views from a wide range of interests, we may focus initially at first on those parties who show an interest at this stage.
28. This paper is not intended to form the consultation on the specific legislative proposals outlined under Action 13 of the Interim Digital Britain Report. We intend to issue a formal consultation on the Action 13 proposals shortly. Responses to this paper will help shape that consultation.
29. The final Digital Britain report in the spring will set out the Government’s way forward on the closely related issues of the rights agency and P2P legislation.