Thursday, October 20, 2011

Hargreaves’ exceptions: format-shifting, parody, research and archiving

At the invitation of Consumer Focus I attended the Pictfor/Consumer Focus Hargreaves’ exceptions: format-shifting, parody, research and archiving panel event, in Committee Room 20 at the House of Commons on Tuesday evening this week. My first ever visit to the innards of Westminster.

The event was chaired by Labour MP, Jim Dowd.

The first speaker on the night was Martin Brennan of JB7  and Advertising Standards Authority spat fame. He opened by explaining that in the midst of his nightmare dispute with the ASA, over allegedly inciting copyright infringement, he felt like the Michael Douglas character in one of his favorite films, Falling Down, when he turns to the cop at the end and says "I'm the bad guy? How did that happen?"

The Brennan JB7 is basically a big iPod which you can use to copy and play all your music without the aid/intervention of a computer. He put 6 years of work and 3 re-mortgages into developing the machine, went from £0 to £7 Milllion (30,000 units) in sales.

The ASA decided, in response to a single anonymous complaint, after 10 million adverts, that Martin Brennan should include a prominent warning on all his ads declaring that copying CDs is not allowed under UK law. Yet the Apple iPods in use in the UK have millions of copied CDs and songs unlawfully copied from the internet and "rip, mix and burn" Apple have no obligation to include such a warning in their ads. As Mr Brennan said:

"I'm not a pirate."

"My customers are not pirates"

The JB7 is simply a "better way to enjoy music you've already paid for."

He rounded off with some general comments about the Hargreaves review recommendations.  Mr Brennan considers himself to be a designer.  He was thrilled to get his first patent at the age of 21 and reckons it was a great one which involved a genuine inventive step.  Since then as an employee in various contexts he's been forced to put his name to junk patents by employers.  The patent system is clogged full of such patents unworthy of protection and as an inventor he believes one of the ways of tackling the issue is, as Hargreaves suggests, increase patent fees. On copyright he thinks the term of copyright is ridiculously out of control and he would have no objection to anyone freely taking and making use of software he wrote 20 years ago. He positively supports Hargreaves notion of a digital copyright exchange.

Finally he said he was forced to include the copyright warnings in his adverts and he believes they have damaged his sales. He is similarly quoted in the Hargreaves review (chapter 5):
“My company is possibly one of the best examples of the sort of SME that can help lead this countryout of the recession – 10,000% growth in 30 months during the recession – but out of date legislationand red tape may sabotage my growth. It is no exaggeration to say that this matter has caused me more sleepless nights and wasted days than any other in my company’s history... Aside from legal headaches I face the cost of reassuring customers that record companies will not sue them. It’s daft because US companies Apple and Microsoft have been selling format shifting products in the UK for a decade."
Milliions routinely disregard, knowingly or unknowingly, the letter of UK copyright law but he's forced to warn people about it even though the government has accepted there should be a format shifting exception.

Next up was Professor Martin Kretschmer, of Bournemouth University's Centre for Intellectual Property Policy and Management. He has produced a very impressive and incredibily rare beast in intellectual property policy circles, an empirical report on the legal basis, rationale and economic effects of copyright levies, (in connection with his ESRC Fellowship at the UK Intellectual Property Office). The report was formally launched the following day at the Work Foundation.

He talked about there being significant copyright infringement through the use of mobile devices. He looked at a range of countries approaches and considered what the UK might do. Article 5 of the 2001 information society directive lists 20 possible exceptions and limitations to the scope of copyright. The UK has, thus far, chosen not to use all of them. (Though Hargreaves has recommended that we do). And since 2001 levies on electronic devices have tripled - €500 million per annum is collected in levies in the EU for private copying.

Of the 20 exceptions 3 require compensation - private copying, reprography and reproduction of broadcasts by social institutions. The Hargreaves review (chapter 5) recommends a limited private copying exception without compensation, partly on the basis of earlier versions of Prof Kretschmer's work in this area and the empirical evidence he provided to the review.
"5.30 The Review favours a limited private copying exception which corresponds to what consumers are already doing. As rights holders are well aware of consumers’ behaviour in this respect, our view is that the benefit of being able to do this is already factored into the price that rights holders are charging. A limited private copying exception which corresponds to the expectations of buyers and sellers of copyright content, and is therefore already priced into the purchase, will by definition not entail a loss for right holders.
5.31 The Government should introduce an exception to allow individuals to make copies for their own and immediate family’s use on different media. Rights holders will be free to pursue whatever compensation the market will provide by taking account of consumers’ freedom to act in this way and by setting prices accordingly."
Prof Kretschmer explained that the EU "fair compensation" provisions of the 2001 directive were interpreted by the European Court of Justice in the 2010 Padawan case as meaning the compensation must be the same everywhere and calculated on the basis of harm.  As the court stated,
"“fair compensation must necessarily be calculated on the basis of the criterion of the harm caused to authors of protected works by the introduction of the private copying exception”
This is different to a concept developed by the highest German federal court in 1964 of "equitable remuneration".  At the time it was decided that anyone who wanted to buy a tape recorder had to provide their personal details.  This was challenged in the courts and the federal court eventually held it to be an unconstitutional invasion of privacy.  Instead they came up with the concept of a statutory licence - equitable remuneration or levies on tape machines and associated ancilliaries to compensate copyright holders.

Professor Kretschmer concluded that we should be highly critical of the EU's fuzzy concept of fair compensation based on harm.  He does believe that ill defined concept, however, gives the UK scope to produce a narrowly conceived private copying exception for consumers - eg to effectively enable copying of CD collections onto Brennan JB7 players.  He reckons 96% or more of music on the average iPod is copied, most is not listened to; and a sufficiently clear, narrowly focussed private copying exception would do nothing to approve mass unlawful copying of songs from the internet, whilst enabling people to lawfully format shift legitimately purchased music. Such format shifting causes no harm to rightsholders  - and as Martin Brennan argued it may even enhance the value of music CDs thereby improving sales - so there would be no requirement for compensatory levies.

Third on the roster for the evening was Richard Brousson, legal counsel at the British Film Institute (BFI). He spoke passionately about the difficulties the BFI faces because the existing archiving exception in the Copyright, Designs and Patents Act excludes film. The BFI is tasked, amongst other things, with preserving and restoring the most significant film collection in the world for today and future generations - a hugely important part of the UK's cultural heritage. He also gave an insight into the difficulties researchers face in accessing our cultural heritage because film is excluded from the existing non-commercial research exception.

The BFI is a registered charity partly funded by government and in recent times has additionally taken on  most of the functions of the British Film Council which was abolished in the coalition government's bonfire of the quangos. You can get chapter and verse on their aims and objectives in the BFI royal charter. They are involved in the preservation of over 275,000 films and 210,000 TV programmes and the exceptions in the 1988 act don't cover the copying of moving images which instantly gives the BFI a problem. Mr Broussan also mentioned that a significant proportion of the films involved were orphan works.

He argued that copyright law is overdue reform if we want to avoid the systematic, legally approved destruction of our cultural heritage. The exceptions in the 1988 act and even specifically the section 29 "research and private study" exception does not apply to moving images. The law is significantly impeding the ability of researchers to access, understand and build on our cultural heritage.  One of the ways the BFI has been dealing with this is through their Screen Online partnership with educational institutions like Cambridge, Derby and Newcastle universities - a terminal based physical walled garden which they also hope to roll out to other universities in the none too distant future.

The complex rights issues do mean they, like the Open University, have to employ a dedicated and expert group of rights and contracts officers and they regularly run into problems with the usual Hollywood crew refusing rights for educational use or archiving, for example.  So the entrenched position of the large rightholders and the perilous state of copyright law and the risks it exposes the BFI to, if for example they attempt to preserve or transfer a copy of an old film in a physically deteriorating medium into a new format, mean it is extremely difficult for them to fulfil their royal charter objectives.

The fourth speaker was James Sedley of Greenpeace.  I'll report on his contribution and some of the subsequent Q&A in a later post.

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