20 December 2013

Clause 13 of the Intellectual Property Bill will probably go through. What next?

The "Denver" claimed as a work of artistic craftsmanship in Hensher v Restawhile  [1976] AC 64
Source Centre for Intellectual Property and Information Law, Virtual Museum

Despite the submissions of Sir Robin Jacob, leading academic lawyers, the IP Federation, the IP Bar Association and the other intellectual property professions HM government seems determined to force through criminal sanctions for registered design and registered Community design infringement. Why HMG has set and indeed held to this course in the face of almost unanimous opposition from those who know most about intellectual property is a mystery but there it is. Governments do silly things sometimes of which the Dangerous Dogs Act is but one example.

What happens next
I have done all that I can as a citizen to persuade HMG to think again by 

But it is not really my battle. Criminalizing registered design infringement does not affect me personally except perhaps as a consumer in that it may feather bed designs such as the "Denver" chair and sofa shown above which were once alleged to be works of artistic craftsmanship. I have therefore given some thought as to the possible consequences (and indeed opportunities) of the proposed legislation.

A registered or registered Community design cannot be infringed if it is invalid.  Unlike the United States where designs are protected by patent law, there is no substantive examination of applications for design or Community design registration in Newport or Alicante. Consequently, there are a lot of designs on both the UK and Community registers that ought not to be there. S.11ZA of the Registered Designs Act 1949 provides a number of grounds upon which a registered design may be declared invalid.   Art 25 of the Community Design Regulation lists the grounds upon which a registered Community design may be invalidated.  Applications for declarations of invalidity of registered designs may be made to the Registrar (that is to say the Intellectual Property Office) under s.11ZB of the Act and applications for declarations of invalidity of registered Community designs may be made to OHIM (Office for Harmonization in the Internal Market) under art 24 (1) of the Regulation. Registered and registered Community designs may also be declared invalid by the Patents Court or Intellectual Property Enterprise Court though the costs of applying to those courts would be higher. Recoverable costs in the Intellectual Property Office are regulated by Tribunal Practice Notice 2/2000.

A rather more sensible provision of the Intellectual Property Bill is clause 11 which would extend the IPO opinions service to registered designs,  The clause would insert a new s.28A into the Registered Designs Act 1949 giving the Secretary of State power to make provision for the Registrar to give an opinion on specified matters "relating to—
(a) designs registered under this Act;
(b) designs of such other description as may be specified."
If, as is likely, the "specified matters" include validity of a design registration this would be a low cost alternative to invalidation. Though the Registrar could not remove a design that he considers to be invalid from the register under this provision it could perhaps provide a defence under the proposed s.35ZA (4):
"It is a defence for a person charged with an offence under this section to show that the person reasonably believed that the registration of the design was invalid."
What grounds could be more reasonable to found a belief that a registration was invalid than an opinion to that effect of an IPO examiner?

Threats Actions
S.26 of the Registered Designs Act 1949 will remain in force. That section provides:
"Where any person (whether entitled to or interested in a registered design or an application for registration of a design or not) by circulars, advertisements or otherwise threatens any other person with proceedings for infringement of the right in a registered design, any person aggrieved thereby may bring an action against him for any such relief as is mentioned in the next following subsection."
Those remedies are a declaration that the threats are unjustifiable, an injunction against the continuance of the threats and damages.

The threats do not have to be explicit to fall within the scope of this section. Anything that would lead a reasonable person to conclude that proceedings will follow non-compliance will suffice. An action may lie not not just against the party on whose behalf a threat was made.  It may also lie against a solicitor, patent attorney or indeed anyone else who utters the threat.  At present the only proceedings caught by this section are civil proceedings because these are the only proceedings that are available at present but if clause 13 goes through I do not see why s.26 should not extend to threats to bring those too.   This section may be an important safeguard against intimidation of departing employees or competitors.

Judicial Review
The proposed s.11ZB would require trading standards officers to enforce the new legislation but the resources of trading standards departments were limited even before austerity. I remember a meeting of the Licensing Executive Society in Leeds in 2005 or 2006 which was addressed by a local trading standards officer. I can't remember the exact figure but the sum of £25,000 has stuck in my mind which I think was his annual budget for counterfeiting and piracy prosecutions in the whole of West Yorkshire. Now it is unlikely that local authorities which are already strapped for cash and are likely to be looking for further savings will increase the budgets of their trading standards officers to take account of this new responsibility. Decisions on priorities are a matter for discretion and I can certainly see battles ahead in the Administrative Court as to how that discretion is to be exercised. Colleagues in my chambers who do public law and local government work are likely to be very busy.

So, too, will some of my junior colleagues such as Alexander Rozycki who is following clause 13 closely and is likely to be one of the first experts in registered designs prosecutions. In the New Year we shall be holding training sessions in London and other cities on IP crime solicitors who expect or would like to do more of that kind of work.  If you would like to put your name down for one of those courses call George Scanlan on 020 7404 5252 during normal business hours or send him a message through out contact form. We will, of course, also be training our solicitor and patent attorney clients and connexions on the other provisions of the Bill.

Ill Wind
Although criminalizing registered design infringement is unlikely to do much for designers or British industry as a whole, it could be very good news for the Bar and the rest of the legal industry. Intellectual property law does not exist solely for the benefit of intellectual asset creators. It is supposed to strike a balance between their interests and those of their competitors and consumers. When that balance gets out of sync - as it did before 31 July 1989 when artistic copyright protected all sorts of rubbish for the life of the designer plus 50 years - it is not good for manufacturing but it can be very good for lawyers. Lord Younger and his Coalition colleagues are no doubt acting with the best of intentions but they should be careful of what they wish for.

17 December 2013

Copyright Licensing BBC v EOS

As everyone knows, copyright restricts the acts listed in s.16 (1) of the Copyright, Designs and Patents Act 1988 ("CDPA") in relation to a work in which copyright subsists ("a copyright work"). Those acts include copying, issuing copies, renting, lending or communicating the work to the public etc. Anyone who does any of those acts without the owner's licence infringes that copyright. He or she may be sued or in an extreme case prosecuted.

Clearly, if you want to broadcast, perform or otherwise make use of a copyright work it is a good idea to get a licence. As all those lovely artists, choreographers, composers. dramatists, novelists, poets, song writers and other authors need to live it is only right that they get paid a reasonable fee for their trouble. But therein lies the rub because what may seem reasonable to you and me as consumers may not feel reasonable to an artist in his garret or, more importantly, his agent in his BMW. As I argued  at the Arab-British Chamber of Commerce conference on IP last week, copyrights and other intellectual property are not an unalloyed good for they confer monopolies which restrict competition and consumer choice.

Monopolies and exclusive rights are particularly baleful when the owners of those rights get together in collecting societies or other licensing bodies.  In saying that I mean no criticism of authors or other intellectual property owners.  It is after all only human to exploit an advantage. But to prevent intellectual property owners from holding the public to ransom some safeguards are required. In the United Kingdom these are provided by Chapters VII and VIII of Part I of the CDPA.  

Chapter VII regulates licensing schemes, that is to say schemes setting out -
(a) the classes of case in which the operator of the scheme, or the person on whose behalf he acts, is willing to grant copyright licences, and
(b) the terms on which licences would be granted in those classes of case.
The definition " includes anything in the nature of a scheme, whether described as a scheme or as a tariff or by any other name (s.116 (1)).

Chapter VIII provides for the Copyright Tribunal (originally set up by S.23 of the Copyright Act 1956 and then known as "the Performing Right Tribunal") to adjudicate disputes over the terms of licensing schemes between those who grant licences such as collecting societies and those who want licences over the terms of such licensing schemes.

A very good example of such a dispute is the one that arose between Eos (an association of Welsh language song writers and others) and the BBC over the terms on which Welsh language content was to be licensed to the Corporation. The content providers wanted £1.5 million while the Beeb offered £100,000. As they couldn't agree the BBC referred the dispute to the Tribunal.   For the BBC's side of the story see "Eos loses £1.5m BBC royalty battle and get £100,000" 16 Dec 2013. For Eos's see "Basic Facts about Eos and the Current Dispute with the BBC". For the Tribunal's decision, see BBC v Eos  (16 Dec 2013).

The provision under which the BBC referred the dispute was s.125 of the CDPA:
"(1) The terms on which a licensing body proposes to grant a licence may be referred to the Copyright Tribunal by the prospective licensee.
(2) The Tribunal shall first decide whether to entertain the reference, and may decline to do so on the ground that the reference is premature.
(3) If the Tribunal decides to entertain the reference it shall consider the terms of the proposed licence and make such order, either confirming or varying the terms, as it may determine to be reasonable in the circumstances.
(4) The order may be made so as to be in force indefinitely or for such period as the Tribunal may determine".
The Tribunal had already accepted the reference earlier in the year as the BBC had applied for an interim order to allow it to use the Eos repertoire at such a rare and on such terms as the Tribunal thought fit pending a substantive hearing (see BBC v EOS (17 May 2013). The substantive hearing took place in September.

The Tribunal found for the BBC on the amount of the royalty because there was already a licensing scheme in place for non-Welsh content between the Performing Right Society ("PRS") and the Mechanical Copyright Protection Society ("MCPS") and the BBC for which s.129 of the CDPA required the Tribunal to have regard. Eos had argued that this scheme was inapplicable because Welsh language authors had not been separately represented in the negotiation. It also contended that Welsh language material was a special case needing special treatment and, in particular, more money for content providers.  The Tribunal was unimpressed with those arguments.   It concluded at paragraph [52] that the PRS and MCPS alliance agreement was a useful starting point and that the methodology used by the BBC to allocate the licence fee payable under that (scheme which was based on content consumption) was a fair basis for apportionment. That would have resulted in a licence fee of £46,000 but it allowed an uplift to £100,000 to take account of special factors relating to Welsh content.

The irony of this case is that the content providers found themselves bound ultimately by the terms of a scheme with which they were dissatisfied and which had prompted them to leave the PRS and set up Eos instead (see the press release "Over 2,000 composers in Wales go it alone" 4 Oct 2012), In the light of the Copyright Tribunal's decision they can be forgiven for wondering why they bothered.  At paragraph [7] of its decision the Tribunal said that its discretion was not unfettered because the Act required it to take account of certain factors in coming to its decision but, if that is so, it is surprising.  The discretion in s125 (3) seems wide enough in that it allows the Tribunal to "make such order, either confirming or varying the terms, as it may determine to be reasonable in the circumstances (my italics)." It is true that s.129 to have regard to the availability of other schemes, or the granting of other licences, and to the terms of those schemes and licences but it is not hidebound by them and in particular it has a duty under s.135 to have regard to all relevant circumstances. If it so wishes Eos can appeal to the High Court on a point of law under s.152 of the CDPA but it must do so within 28 days from the date of the decision in order (rule 33 (1) of the Copyright Tribunal Rules 2010).

Should anyone wish to discuss this article or indeed copyright licensing in general he or she is welcome to call me on 020 7404 5252 during normal business hours or message me through my contact form. He or she can also tweet me, write on my wall or contact me through G+, Linkedin or Xing.