I thank the Minister warmly for his introduction. Whatever comments I may have on the substance of the exceptions, I thank him for his careful navigation and assiduous consultation and communication in the run-up to these SIs being tabled, including for the way in which the regulations have been presented to Parliament. I also thank him for his willingness to debate the issues, as we did last December and before the Secondary Legislation Scrutiny Committee recently. We should thank both the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee for their careful scrutiny. I am pleased to hear from the noble and learned Lord, Lord Scott, and to see that the noble Baroness, Lady Morris, is in her place, as is the chair of the Secondary Legislation Scrutiny Committee, the noble Lord, Lord Goodlad.
There were some very good reasons for this careful scrutiny. After all, copyright is the foundation of our creative industries’ success and the economic driver of growth for this sector, which contributes £71.4 billion to the UK economy. The reform of copyright should be handled sensitively, with the value of the creative industries and any negative impact caused by changes to the law firmly in mind. Wrongly formulated, the exceptions could potentially deter investment in the industries and weaken performers’ and creators’ ability to benefit financially from their work.
It is also an extremely technical area of law. It has been pointed out by many experts that the Government’s proposed changes to primary copyright law implemented by way of secondary legislation risk not being compliant with our obligations under EU directives and incorrectly implement related legislation. It is notable that the Secondary Legislation Scrutiny Committee remarked from the outset in its report on the strength of opinion on the question of contract override, which I attempted to highlight in our December debate. It also said that,
“we flag up the possibility that the changes will have a greater economic impact on producers and creators than the Government have so far envisaged”—
a point made by the noble and learned Lord, Lord Scott. The committee expressly says that it is not persuaded by the Minister’s statement that the changes are relatively minor. This particularly applies to the personal copies for private use exception, to be debated in future.
The Government cannot have it both ways. They cannot say that these exceptions will have minimal effect and then claim that there will be a benefit of a total of £500 million to the UK economy over 10 years for all five of the exceptions and £250 million for those that we are discussing today. In fact, in the Commons committee, a number of MPs drew attention to inadequacies with the impact assessments and sought to probe further how the figure of £500 million was arrived at. Where does this figure come from? Can we have a complete breakdown? Are the Government certain that this benefit is without any loss on the other side of the equation, a point raised by the noble and learned Lord, Lord Scott? How do the Government plan to monitor whether this benefit is achieved?
As a result of one of the key conclusions, where I wholeheartedly agree with the SLSC, the instruments are to be reviewed by the Intellectual Property Office no later than April 2019. The committee said:
“We would urge the Government to monitor the impact of the changes from the point of implementation, and in particular to respond effectively if it becomes clear that any negative potential is being realised”.
Can the Minister give that assurance? Can he commit to repealing these regulations if there is overwhelming evidence of a negative impact?
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In the end, it has to be recognised that the Minister is a man on a mission to implement the Hargreaves recommendations, as he admitted to the scrutiny committee. There is a major division of opinion here. I and many among the rights holders believe that, with significant commercial developments in licensing made possible especially by new technology—the creation of a copyright hub, the Global Repertoire Database and so on—only a very limited case can be made for these copyright exceptions. Moreover, there have been significant developments since the Hargreaves report was published. Exceptions should not apply where a commercially available alternative already exists. Sadly, the Government have not accepted this important principle or, let it be said, the flexibility contained in the information society directive. Rather, they have insisted on driving these exceptions through, as the memorandum from BIS to the Joint Committee on Statutory Instruments makes clear, using what they believe is the legally sound option of contract override.
David Willetts’ rationale in the Commons committee, in the light of research showing that 90% of research-focused requests for text and data mining are granted within a week at little or no cost to those seeking permission, for why the exception was needed, was barely credible. It appears that filling in a form—that is, asking for permission—is now an “unreasonable imposition”. Is that what the Government’s justification for introducing this exception amounts to?
There are many issues to do with contract override and it is clear that even the Intellectual Property Office does not fully understand the position. The IPO has said that,
“the exception for photocopying by schools cannot be overridden by contract, so this is not us taking an unprecedented step”.
I do not believe that this is a completely accurate interpretation of the relevant section, Section 36 of the Copyright, Designs and Patents Act 1988, which applies to reprographic copying by educational establishments. The provisions of this section introduce an exception to copyright to permit photocopying by schools, but critically also provide that copying is not authorised,
“if, or to the extent that, licences are available authorising the copying in question”.
This provision is often referred to as an exception subject to licence, so the contract override provisions with which the IPO sought to make comparison are highly limited and apply directly and specifically to the terms of contracts of the licence working alongside the exception. This is a fundamentally different proposition to that being proposed in these statutory instruments, which seek to impose contract override provisions on any and all contracts.
It is also far from clear that the exceptions will not prove to be retrospective in the way they override contract. In the notes published by the IPO accompanying the exceptions, Exceptions to Copyright: Guidance for creators and copyright owners, it is stated that:
“Where a licence granted under the old law gives wider permissions than the new law, the licence will be unaffected. However, where the new law permits more than the licence, the licence holder will be able to rely on the new law. The licence will still be valid, but a licensee cannot be made to comply with any term in so far as it seeks to restrict something that the new law allows. E.g if an individual purchases a work on terms which prevent the copying of the work for any purpose, it will not be a breach of the licence if the purchaser makes a personal copy”.
It is clear from the guidance that, for any existing licence, certain terms will no longer be enforceable, and of course there was an element of confusion before the Secondary Legislation Scrutiny Committee, in answering the noble Baroness, Lady Morris, on this point, but that is indeed what my noble friend confirmed in his subsequent letter dated 12 May to the chair of the committee. But the point posed by my right honourable friend David Heath MP to the universities Minister in the Commons Fourth Delegated Legislation Committee remains inadequately answered by the Government. He said that:
“A previously agreed contract that conflicts with the new regulations will effectively cease to be enforceable. That creates a retrospectivity issue, so I would be grateful if the Minister would explain his view on the setting aside of contractual arrangements that are already in place”.—[Official Report, 12/5/14; Commons, Fourth Delegated Legislation Committee; col. 11.]
The Government’s response, both in my noble friend’s letter and in David Willetts’ comments to the committee, goes only half way to meeting the point. Their first line of argument is that it is not retrospective because it will not render a person liable for an action committed in the past. That is all well and good as far as it goes from a user’s perspective, but it does not deal with the perspective of the rights holders. The second line of argument from the Government is that retrospection
does not come into play with regards to contracts because the effect will be in the future, but the Government’s approach does seem to fall foul of paragraph 1(1)(b) in Schedule 2 to the European Communities Act 1972. This states that a provision should not take,
“effect from a date earlier than that of the making of the instrument”.
However, the contract override provisions do precisely that. Their effect is to render unenforceable a contract made at an earlier time. What can my noble friend say in response to this?
Then of course there is the question of whether these exceptions should have been introduced by primary or secondary legislation. They in fact could perfectly well have been proposed during the passage of the recent Intellectual Property Bill as substantive amendments, fully debated and, if necessary, amended. It is very regrettable that we have not had that opportunity in view of the controversy surrounding them. The Minister claimed before the Secondary Legislation Scrutiny Committee that 50 copyright exceptions have been dealt with by statutory instrument rather than primary legislation. Is that really correct? I do not think there are 50 copyright exceptions; I think he meant the number of amendments to the Copyright, Designs and Patents Act.
What can the Minister say about the guidance material which will be used to brief and educate the public, consumers, intending researchers and so on? Multiple inaccuracies have been pointed out to the Minister and to the IPO by rights holders. I will not highlight the particular problems with the personal copying and parody exceptions guidance, as they are not subject to debate today, but they are considerable.
As regards data and text mining, the Explanatory Memorandum says:
“Publishers will be able to impose reasonable measures to maintain stability and security of their computer networks as long as researchers are able to benefit from the exception to carry out non-commercial research”.
This is followed by the government response to the technical consultation and the guidance note. However, the contract override provisions in the relevant SI itself state that any part of a contract which seeks to restrict the act of reproduction is unenforceable. Since one of the reasonable measures publishers would seek to impose is a restriction on the speed and level of “crawling”, these two provisions contradict each other. Can the Minister resolve that contradiction? If so, can he confirm that other examples may be valid as well? Does he envisage publishers being able to operate an “electronic handshake” procedure, or other form of formal verification, to ensure that the text or data miner is who they say they are? If so, this should be clearly stated in the guidance.
What assurance can the Minister give generally that that the vital material explaining each of these exceptions will be revised and only then published? Surely, the setting of an arbitrary date of 1 June—not on a common commencement date—militates against this.
The Minister’s rationale before the Secondary Legislation Scrutiny Committee for the commencement date was that,
“we had had such a long consultation and that certain stakeholders were really pushing us to get on with it, if I may put it that way. We thought we should do that and go for 1 June rather than delay further, until October, which would be the next window”.
Mr Willetts was equally circular in response in the committee. He basically said that it was included among the key domestic measures in the Government’s seventh statement of new regulations. Instead of adhering to the common commencement date programme, the Government are implementing early simply because they want to. Should the Minister not revise the implementation date to the common commencement date of 1 October for all new exceptions and take the opportunity to revise and correct the consumer-facing material at the same time? I look forward to the Minister’s reply.