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Digital copyright: Not much action, lots of talking shops

A technocrat's fix to a market problem

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Games, music and movie industries are putting a brave face on this week's deluge of official IP announcements, while anti-copyright campaigners will be delighted a chunk of legislation passed by elected MPs has been struck down by a quango.

Britain's permanent government, our bureaucracy, has dug its heels in and managed to delay or derail much of what it didn't like. A laundry list of Google niggles has been added. And for the music and movie businesses, insult has been added to injury: the anti-piracy timetable was already a year behind schedule, and now they'll have to pay the full costs of the Digital Economy Act's notifications appeals.

A long road stretches ahead, as key recommendations in Hargreaves' "Google Review" now go out to consultation. But it might be a bumpy one. The truth is, despite the government spin of a "massive overhaul", there's really only a few tweaks and an optimistic punt here or there.

What comes next

Hargreaves only "big" idea is a Digital Copyright Exchange – which means different things to different people. The government says it "wants to see a DCE or something like it", giving itself a little wiggle room. It envisages the DCE as "a marketplace" where people trade, rather than look up information. And it wants it all in hurry: by the end of 2012. And it plucks a figure out of the air; it reckons a DCE "could add up to £2.2bn a year to the UK economy by 2020".

A licensing exchange could work very well, depending on what it's for. The most imaginative solution to the orphans problem I heard was something similar, proposed by the photographers' group Stop43 – a B2B eBay-style exchange. But that's a unique situation. In the case of "orphan" photographs, much of the grunt work of image identification could be done by a computer. The rights clearance for a song is much more complicated. And for a movie, even more complicated. Every situation turns out to have unique wrinkles.

The government, however, wants the DCE to do everything.

What kills the DCE is that it's a technocratic fix to a market problem. Creators and their appointed middlemen will not submit their rights to a system if they think they're going to be fleeced by it. Nothing can coerce them into do so, as the government's response acknowledges:

"We believe compulsory participation could be contrary to the Berne Convention and, more importantly, distort the market. But experience in the United States and elsewhere suggests that a voluntary system can be incentivised without violation of Berne."

IP lawyer Jeremy Phillips at the IPKat blog "bets it will cost more to run, in terms of setting up and administering the system, legal advice and uncertainty among rights owners and prospective users, than it will ever save or earn".

Academics are often accused of being out of touch with commerce, and are notorious for looking to technocratic fixes as a magic wand. Hargreaves unfortunately falls into this trap. Historically, exchanges emerge from a successful market, from the very need to buy and sell; they emerge because both buyers and sellers want to lower their costs, and get together to do so. Hargreaves envisages a mother-of-all-exchanges then creating lots of markets. And maybe unicorns, too.

I can envisage a cobbled-together database of some kind launching, probably a year late and over-budget, that contains lists of IP lawyers. But not much more.

Exemptions

Grabbing all the headlines is the exemption for private copying, aka "format shifting", one of four exemptions proposed in Hargreaves. This was recommended by the Gowers Report but never implemented. Everyone does it, and has for years, but there's a minefield for the government in implementing it. How so?

Well, remember that the exclusive right to make copies belongs to the author – or somebody they've assigned that right to, such as a record label (for a band) or newspaper (for a writer) for example. The European Directive on copyright allows a Member State to make an exemption for private copying – but only if the copyright-holder receives "fair compensation". Most countries have implemented the exemption on this basis – a small levy (or bung) is passed along, and everyone carries on as before.

Six weeks ago, the European Court of Justice reminded everyone (the case is Stichting de Thuiskopie v Opus Supplies Deutschland GmbH) that the Directives:

impose on a Member State which has introduced the private copying exception into its national law an obligation to achieve a certain result, meaning that it must guarantee, within the framework of its competences, the effective recovery of the fair compensation intended to compensate the authors harmed by the prejudice sustained.

I understand that the government thinks it can wriggle out of this by arguing that no economic harm is done. But it might be heading for an expensive defeat if it wants to defend that wriggle before the European Court of Justice.

Another exemption – parody – appears designed to maximise publicity. And here the voice of Google can be heard. Google cited the example in its submission of "Newport State of Mind", apparently an example of how copyright is oppressing the humourists of the nation. But the video has been available for over a year, in several versions.

Non-commercial research, using text or data-mining of other databases or collections of material, should also be exempt – although what constitutes "non commercial" is moot. Private study and non-commercial research are already covered by exemptions, as the British Academy acknowledges.

UK law has always provided for exemption from copyright for fair dealing in the course of research. There is, however, no statutory definition of research, or clarity on what differentiates the use of otherwise copyright material in research from its use in private study, or in criticism, or in review. Research involves the production of new ideas, whereas private study might represent only the consideration of existing ones. But this is a fine line indeed, and not one that it would seem appropriate for a publisher, or a court, to draw."

Orphans are back

The government will also introduce proposals for an orphan works scheme, "subject to satisfactory safeguards for the interests of both owners of 'orphan rights' and rights-holders who could suffer from unfair competition from an orphan works scheme." It promises to look at misattribution and loss of ownership data, two issues which helped sink Clause 43 of the Digital Economy Act, but otherwise re-introduces the extended collective licensing scheme backed after lobbying from the British Library.

It also promises to put collecting societies on watch, having heard of "heavy-handed, misleading or unfair practice in charging for usage of works". You can hear Google in that sentence. The government will "establish minimum standards for voluntary codes in early 2012 and consult with collecting societies on their implementation".

Google operates perhaps what is the world's biggest pirate music site, YouTube, and was engaged in a bitter dispute with the Performing Rights Society (PRS) over music royalty rates. It's payback time.

The government also notes the review's call for more legal academics to be involved – not a surprising recommendation from legal academics.

The government will explore how bolstering the IPO "could help establish priorities for legislative change by identifying areas of practical uncertainty for business, particularly smaller business, to supplement the judgement of the legal profession and academic commentators."

Academics generally speak as one on copyright – they can't stand it. And neither can civil servants, as Ofcom has demonstrated today. ®

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