Copyright Hub - the future of licensing and other reforms

Copyright licensing report

Richard Hooper’s “Phase 2” report on copyright licensing, subtitled “Streamlining copyright licensing for the digital age” was published, as promised by the summer break, on 31 July 2012. It recommends the creation of a Copyright Hub, to be overseen by a newly created steering group, which it is hoped will maintain momentum and place the UK in a world leading position in relation to copyright licensing.

The Hub would have the following functions:

• act as a signpost and navigational aid to copyright;
• provide education on copyright;
• be the place where copyright owners can (voluntarily) register their works for licensing by third parties;
• be the place for potential licensees to go for easy, transparent, low cost licensing; and
• be an authoritative place which potential users of orphan works could search to demonstrate reasonable diligence in finding the copyright owner.

The focus would be on high volume, low value transactions, both for small and large users, with as much automation as possible.

Richard Hooper was appointed by the Government in late 2011 following the Hargreaves Review with the remit of considering a digital copyright exchange in order to modernise copyright licensing.

His “Phase 1” report, published in March 2012, followed extensive evidence gathering. It found that copyright licensing is “siloed”, as it is not international in focus and scope and there are no agreed operating standards across different industry sectors. There were found to be significant problems with libraries, archives, museums, educational institutions, the audio-visual industry, publishing, music, images, photographs and artwork. In many cases it was difficult to identify copyright owners and licensing was too complex with many different organisations involved.

The “wish list” was for solutions to be industry led and funded, cross sector and international, voluntary, but with clever incentives, clear, open, flexible, freely accessible, reducing infringement, increasing competition, innovation and growth, maximising wider social benefits, creating new value, building on existing IT standards and investments and protective of the rights and investment in content.

This “Phase 2” report identifies four main areas which need attention, as follows:

1. Data building blocks

Quality of data - who owns what and where - is key. It is noted that some international standard identifiers exist, as with the publishing industry which uses ISBN numbers, and the music industries which use ISRC numbers to identify recordings and ISWC numbers to identify specific musical works. However, these are not always used accurately and consistently. Where such identifiers do not exist or where multiple systems are used, it is recommended that relevant organisations work together to agree a practical approach.

Further, it is recognised that there is a specific problem in the images industry where there is no unique identifying system and also routine stripping by publishers of metadata from images, which means that the owner cannot be identified and remunerated, thus rendering the work an “orphan”. It is recommended that this practice, as well as the use of images from which metadata has been stripped, should be discouraged by the introduction of a voluntary code among publishers and broadcasters. Also software to enable straightforward retention of metadata should be improved.

Support is given to several successful database projects which can act as examples to others: the Global Repertoire Database in music publishing, the Global Recording Database for musical recordings and the Linked Content Coalition, which focuses on developing a common language and standards to achieve interoperability between different databases.

2. Reducing complexity and expense of licensing

The main recommendation is for the creation of a UK based Copyright Hub to be industry-funded and created and not-for-profit. The Hub would link to a network of digital copyright exchanges and databases across different industries, using agreed data building blocks and standards. Use of the Hub would be on a voluntary “opt-in” basis.

It is recognised that the Hub faces major IT challenges, strategic, funding and governance issues and will require considerable cross sector and international collaboration. The report notes that “…collaboration will not be easy to achieve given levels of mistrust that can arise between different parties on the one side and the constraints placed by competition law on the other.”

There is a focus on the areas of educational institutions where a “one stop shop” is recommended (as opposed to the twelve organisations which need to be dealt with now) and music industry licensing, where more streamlining to create a single licensing model across Europe should be done. It is noted that given the music industry’s campaigning for stronger enforcement against infringement, difficulty in licensing, and any perception of such difficulty, are damaging. The report welcomes co-operation as between the two collecting societies, PPL and PRS, both of whom are relevant to many small businesses, which will result in increased joint licensing.

3. Orphan works and mass digitisation

Legislative changes are needed to enable use of works for which the copyright owner cannot be identified or located (see below). From a technical perspective the report supports the ARROW projects (Accessible Registries of Rights Information and Orphan Works) which concern automated due diligence for orphan works by linkage of searching libraries around the world. It is anticipated that one of the functions of the Copyright Hub would be a search resource for orphan works.

4. Repertoire imbalance

The report notes that there is still an imbalance (or at least the perception of an imbalance) between availability of physical and digital copies of works, which encourages illegal use. It recommends that the audiovisual industry in particular continues to work to reduce this imbalance.

A large amount of work has been carried out in a short space of time to produce this concise report and also it is clear that across many industry sectors active steps are being taken to streamline the process of copyright licensing. Further, the creative industries have agreed to fund an office to continue this work for one year, subject to detailed discussion with Government, particularly on proposed changes to the law on copyright exceptions and how that might impact on the Copyright Hub. It is to be hoped that progress will continue apace.

Forthcoming legislation progress

The Government plans to introduce legislation in the near future dealing with:

(i) Commercial and non commercial exploitation of orphan works

It is intended to introduce legislation allowing all use of orphan works after a diligent search has been carried out and confirmed by an independent authorising body, while ensuring adequate protection for absent rights holders, including upfront payment of market rate fees to be set aside. There will be a registry of orphan works. Detailed scheme rules will be prepared and subject to further consultation. This scheme would be wider than envisaged in the current European draft directive on orphan rights.

(ii) Voluntary extended collective licensing

Collecting societies which meet the necessary standards for protecting rights holders’ interests could seek permission to license out works on behalf of rights holders who are not members, save for those who opt out. This will help to encourage mass digitisation. Further details will be subject to consultation.

(iii) Codes of conduct for collecting societies

The Government intends to introduce a backstop power to enable the application of a statutory code of conduct in the event that collecting societies do not implement or adhere to minimum standards. Also in July the European Commission adopted a proposal for a Directive on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use.

In the UK these changes will be introduced via the Enterprise and Regulatory Reform Bill 2012-13.

A paper on the role of the Intellectual Property Office (“IPO”) has also been issued following the Hargreaves Review. The IPO is now to report annually on the extent to which its activities promote innovation and growth and to publish alongside impact assessments relating to new legislation a summary of impact on innovation and growth. Further, the IPO has agreed a memorandum of understanding with the OFT to boost co-operation, including provision to allow the IPO to refer cases to the OFT. The Hargreaves Review proposal for the IPO to provide statutory opinions on difficult copyright issues has not yet been addressed.

The Government’s decisions on copyright exceptions will be set out in a further statement later this year and further work on other aspects of the Hargreaves review will be announced separately.

Click here to access the Copyright Licensing report of 31 July 2012.