Two copyright exceptions missing: did the Scrutiny Committee know?

Even though such a long time has passed in investigating digital opportunities, writing reviews, rethinking intellectual property and debating how to foster growth, the last word has apparently not been said on the new UK exceptions to copyright infringement. Late this afternoon, Labour MP Iain Wright tweeted:

In response to a question from Katfriend Emily Goodhand [twitterly known as copyrightgirl], Wright replied that "Committee was due to consider 5 copyright exceptions on Monday. The 2 were pulled this afternoon, no explanation yet".

While anxiously waiting for Eleonora's take on this, some deductions as to what is actually happening might be inferred from this report from Catherine Pocock (Assistant Editor, QM Journal of Intellectual Property and LLM Candidate at Queen Mary University of London, right) on the Lords Secondary Legislation Scrutiny Committee that took place yesterday, at which the proposed new UK exceptions were debated. Here's what Catherine says:

"This IP enthusiast took a leisurely break from revision yesterday afternoon to listen in to the Lords Secondary Legislation Scrutiny Committee discuss the Statutory Instruments implementing the Hargreaves Review. Following this evening’s rather surprising news of the withdrawal by the Government of the exceptions on parody and private copying, it seems that only the remaining provisions of Statutory Instruments (copyright exceptions regarding regulation on access by individuals with a disability, on research, education, libraries and archives (here) and on public administration) will be going to Parliament for their implementation in June. While no mention was made of it during the Committee, the exception for quotation and parody has been pulled.  

Led by Viscount Younger of Leckie, yesterday’s debate saw witnesses Charlotte Heyes (Deputy Director, Hargreaves Review Implementation) and Robin Stout (Deputy Director, Copyright Policy and Deputy Director) answer a number of questions with a single line of argument: the wording of the exceptions is appropriate to its objectives of enhancing economic growth. Much emphasis was placed on enhancing economic growth at both ends of the spectrum, highlighting benefits for the consumer (end users, libraries), the UK economy (supposedly £500 million over 10 years) and stating the existence of benefits to the right holders and creative industries (giving no example or evidence of such benefits, although maybe it is an implicit invitation to consult the impact assessments again). It is suggested that the scales weigh a little heavy on the ‘benefits to users’ side – and wonders whether this indirectly include commercial users). The three elements which were most interesting in this session were those concerning the absence of a compensation mechanism in the private copying exception, the inclusion of dumb-locker cloud services and the contractual overrides. All three relate to the private copying exception which, as mentioned in the introduction, have been pulled.

1. Fair compensation of right holders – or lack thereof – for the exception for ‘personal copies for private use’ under the new Section 28B CDPA

Having had regard to the levy systems in other EU countries Robin Stout mentioned the list of permissible and non-mandatory exceptions under Article 5 of Directive 2001/29 on the Harmonisation of Certain Aspects of Copyright and Related Rights in the Information Society (the 'Infosoc Directive').His understanding seemed to be that, since the scope of these exceptions is not defined by EU law, as the continental countries have provided for wide exceptions they have needed to implement a levy system to compensate rightholders. This guest blogger would argue that EU law does in fact regulate the breadth of the exceptions -- at least through case law [where have I already heard that, Merpel wonders?] -- and that it is only the choice of exception and implementation mechanism which is left to Member State discretion. Indeed, in the case of private copying Infosoc 5(2)(b) reads: 

“Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 … in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the right holders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subject-matter concerned”. 

However, Robin Stout continued, the Statutory Instruments as they now stand have drafted this provision so narrowly that no harm – or no more than minimal harm – is caused and there is no need for compensation that is not already provided for in the price of sale. This guest blogger wonders whether any evidence could have been mentioned to back this up, and whether news of the CJEU findings in Case C-467/08 SGAE [on which see here] of a presumption of harm for private copying exceptions had in fact travelled this far -- the witnesses did seem somewhat confused when addressing these questions.

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More questions from the floor as to whether there would be an increase of the sale price of CDs/DVDs to compensate the creators were raised (but not answered). The ‘narrow drafting’ card was again pulled out, as only the private copy for personal use is excused from being an infringing act. The main argument of the Intellectual Property Office (IPO) for its narrow drafting relies upon the exclusion of illegitimate copies from the private copying exception, however this is not much narrower than the ‘harmonised’ EU scope of the exception as clarified in the recent CJEU decision in Case C-435/12 ACI Adam [on which see Katnote here] where it was said that any private copying exception only applies to legitimate copies. Further questions as to enforcement arose and remained largely unanswered – it was suggested by one member that private copies will de facto be shared (and this sounds like the gospel truth). 

2. Cloud services under new Section 28B(5)(c)   

The committee also touched upon the legislation enabling cloud services to benefit from this exception. The growth agenda was mentioned again since the inclusion of cloud services within the exception will allow for them to develop and thrive. Further, the position of the witnesses was that having to pay for acquisition of the content and then a second time for storage of that content would be unfair. It was stated that the exception is drafted narrowly so as to only include ‘dumb lockers’ (i.e.: cloud services used solely for storage and not as a sharing platform, hence the IPO’s analogy to a shed). However, this guest blogger would argue that, although that may be the policy intention, it is not reflected within the wording and should be clarified in statute. There are also questions of enforcement and monitoring. In the same way as it seems difficult to enforce the private copies so that they stay private, such policing could be rather difficult even though Robin Stout believes it to be easier in the light of the tracing available with online activities (the government may be giving this exception to the consumer with one hand but suggesting to take it back with the other by enforcing it with closer monitoring of their activities).

3. Invalidity of contractual overrides in new Section 28B(10)  

This last part shed light on the general principle of English law of sanctity of contract (the ability ‘to enter into whatever type of legally binding agreement one wishes with no legal limitations other than being of legal age to do so’ as per Black’s online dictionary here). However, new Section 28B(10) CDPA currently provides that any contractual clause overriding the exceptions will be void as it would undermine Government’s authority to legislate.The witnesses’ position seems to be that there is no potential for conflict of law: the new provisions will override the conflicting clauses but uphold the remaining contractual clauses. Mention was also made of the ‘chilling effect’ of the licensing process. 

This guest blogger suggests that the Government may have approached this exercise of ‘balance of rights’ thinking that the copyright owner is the stronger bargaining party. As Robin Stout pointed out, yet as the digital environment currently stands these copying and storing (sharing?) activities are already taking place (and this guest blogger would add – without any compensation for the rightholder). To use La Fontaine’s evocative fable, the right owner is rather more the Grasshopper grappling with the Ants for a little subsistence."