My Lords, I am privileged to be here speaking for the first time as a Minister for the Department for Business, Innovation and Skills and moving my first piece of business in this House. I should say that I value the work of this House and its expertise very highly.
In a traditional collective licensing arrangement, the relevant licensing bodies—or collecting societies as they are otherwise known—are mandated by their members to manage their rights. Extended collective licensing—which I will refer to if I may as ECL—allows collecting societies to license on behalf of all rights holders who fall in the scope of the ECL scheme. This includes rights holders who are not members of the collecting society and have not given it a mandate to license their rights. They become part of the ECL scheme by default unless they say otherwise. This is known as opting out.
ECL can be used to simplify licensing, reduce costs and increase the amount of legally available copyright material. With an ECL scheme in place, a collecting society can issue the comprehensive licences that its customers demand, but without the risk of infringing non-members’ rights. Consequently, there should be improved compliance with copyright law, enhanced confidence in the UK copyright system and increased returns to non-member rights holders, because the regulations make clear provision for how and when money should be paid to them.
It is well known that de facto ECL schemes are already in operation in the UK. Their existence reflects market demand. Statutory ECL will allow collecting societies running such schemes to put their businesses on a legal footing and protect rights holders’ interests.
As ECL schemes allow for the licensing of non-members’ works, it is essential that they are afforded strong protections. As I shall outline, this is the golden thread that runs through these regulations—golden light dawns. An ECL application simply cannot get off the ground unless the collecting society has a mandate from its members. Not only must it prove that it is acting with the informed consent of a substantial proportion of its voting members, it must also show itself to be significantly representative of the rights holders affected by the ECL scheme. Members’ views and their informed consent are at the heart of an ECL application. They are a good proxy for non-member rights holders, who can reasonably be assumed to share the same interests.
We have been fleshing out the concept of informed consent with stakeholders in recent weeks. The elements that go to making consent informed will be outlined in the legal guidance that accompanies the regulations. It will cover who should be balloted, how they should be balloted, what information they should be given, and so on.
I pause here to say that this work with our stakeholders is but one example of the in-depth research and consultation that we have been conducting since the passage of the ERR Act, taken through under the stewardship of my predecessor, my noble friend Lord Younger of Leckie. We have convened working groups that ran until September 2013; conducted a technical consultation between November and January 2014; developed the regulations and published the government response in May 2014.
The Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014—the codes regulations, for short—which were taken through on 6 April this year, provide a further safeguard for rights holders. They require collecting societies to self-regulate with codes of practice that comply with minimum standards of governance and transparency set by the Government. The Government can act to remedy any problems in the self-regulatory framework. Collecting societies’ compliance with their codes is reviewed regularly by an independent code reviewer, whose evidence will form part of any ECL application.
In addition, these regulations make provision for a period of representations lasting a minimum of 28 days. This is an opportunity for any interested parties to comment on anything related to the ECL application, including the credibility of the collecting society. To cater for the possibility that, despite these safeguards, an ECL scheme is operating less than optimally, the Secretary of State has the power to modify or revoke an ECL authorisation.
The regulations allow for an initial, renewable authorisation period of five years. This mirrors successful ECL schemes in the Nordic countries. Libraries and archives have argued for a longer authorisation period to encourage digitisation. However, the Government feel that the soundness of an ECL scheme must be properly tested within a shorter period of time. As a compromise, if the ECL is renewed, it can continue indefinitely, subject to three-year reviews. These are light-touch unless there are grounds for further scrutiny. This should help facilitate digitisation while still protecting rights holders.
The right of a non-member to say no or opt out is absolute. This allows the non-member to withdraw from a scheme both before and after it has commenced. To facilitate opt-out, the collecting society must show how it will alert non-members to the scheme when it applies. Collecting societies have an obligation to make reasonable efforts to find and pay non-members. Their efforts will be assessed during the renewal and review processes.
I hope that these regulations provide noble Lords with the detail that they asked for and that we promised when the then ERR Bill was at Committee and Report stages. ECL schemes in the UK should benefit licensees, collecting societies and rights holders alike. The Government have put in place a flexible and balanced framework that safeguards the interests of non-members and ensures that ECL schemes are possible only where they have been demanded by the market and sanctioned by rights holders. ECL schemes will enhance respect for copyright, help rights holders get paid and allow for more streamlined licensing so that a greater number of works can be circulated and enjoyed legally. The Government believe that these regulations are a reasoned and proportionate reform and I commend them to the Committee.