BPI_Text

The British Phonographic Industry Limited ("BPI")
November 2002

Comments in response to the Patent Office Consultation on the Report of the Commission on Intellectual Property Rights
"Integrating Intellectual Property Rights and Development Policy".

Introduction

The British Phonographic Industry Limited (BPI) is the UK record industry trade association representing over 300 companies ranging from small independent labels to multinational corporations. Together these companies account for over 90% of recorded music output in the United Kingdom. The UK record industry is the third largest in the world, ranking behind only the US and Japan.

We refer to the Report "Integrating Intellectual Property Rights and Development Policy" produced by the Commission on Intellectual Property Rights established by the Secretary of State for International Development, Clare Short ("the Report").

We are grateful to the Patent Office for inviting comments on the Report. We are concerned that it contradicts current government policy in relation to copyright. The Report recognises that copyright was and remains the basis for making and publishing copyright works an economic proposition by preventing copying. For the BPI and its members, copyright is the fundamental right upon which the UK recording industry is based. Our comments will therefore concentrate upon the immediate concerns relating to adverse effects on copyright, leaving others to address concerns relating to the other types of intellectual property referred to in the Report.

The Report suggests "there is no clear economic rationale for copyright protection being so much longer than for patents". This fails to take account of the economic realities for the record business and the way in which the use and distribution of high profile works secure a fair return for use which is vital for the support of research and development, and the maintenance of diversity in the industry.

Economic returns are secured from the use of copyright works in ways that recognise the creativity and investment put into their creation. The time during which it is fair for owners to be able to expect a return for the use of their works by third parties has evolved differently from other types of intellectual property precisely because of the nature of copyright as a property right. Internationally respect for copyright has evolved to include balances for exceptions and fair dealing in circumstances where the fair return for rights owners can reasonably be overruled by public interest in terms of access.

We recognise that balances are important, but the torpedo approach to the existing system suggested by the Report would be particularly damaging to creative industries, including the record industry, at a time when instant world wide accessibility to copyright works is becoming increasingly the norm. This accessibility is also exacerbating the challenges faced by the creative industries from piracy. In many of the developing countries at which the Report is targeted levels of piracy are already at levels which dwarf legitimate copyright exploitation.

This is not a time for the international protection to be weakened. Quite the reverse. It is only with the support of Governments in the developing countries that havens for the pirates can
be challenged, and legitimate business and avenues for the development of local culture developed.

Effect on UK Government Policy

The Report is not a government paper. It was launched in Geneva and has attracted the attention of journalists. Clare Short referred to this report as "setting the agenda for rethinking IP that may shift the world". We are concerned that it will be perceived by developing countries as a change in government policy in relation to copyright.

The Patent Office has been active in promoting strong copyright protection in developing countries and we are concerned that all the achievements to date, for example in the commonwealth countries, are undermined by the Report. The record industry appreciates the work of the Patent Office with WIPO and the WTO to establish an equal level of copyright protection over the world. The Report's conclusion that "developing countries would probably be unwise to endorse the WIPO Copyright Treaty" advocates going back to a level of minimal protection and diminishes everything the UK government has achieved so far for the UK record industry and other copyright based industries.

International Architecture

Chapter 8 of the Report reviews the "International Architecture". The BPI supports the international system of existing multilateral, regional and bilateral agreements.

The multilateral agreements administered by WIPO are particularly supported by the BPI. Developing countries are represented at WIPO and the WTO. The Report makes recommendations to improve the representation of developing countries but goes further. It questions the whole agenda of these organisations.

WIPO has organised numerous initiatives to promote intellectual property rights in developing countries. Music plays a role of particular importance here, for although developing countries may lack the domestic expertise and business skills to bring music products to global markets, cultural industries have grown faster than any other areas of economic activity and intellectual property protection can stimulate artistic efforts and ensure rewards for artists and other right holders.

WIPO has promoted the ratification of the WCT and the WPPT. Developing countries received assistance from WIPO in preparing new or updating existing intellectual property laws in compliance with current international standards, such as TRIPs. WIPO has also offered assistance to developing countries in the field of collective management. As all the developing countries have an abundance of talent in music and culture, collective management could translate this talent into a source of foreign exchange earnings. Further, WIPO has organised conferences to provide information on and improve awareness of intellectual property issues relating to electronic commerce and to develop a framework of co-operation for successful IP-related e-commerce initiatives.

The need for strong IPR Protection

The Report concludes that retaining freedom to legislate for weaker levels of IPR protection than those established by WIPO and TRIPS is better for developing countries.

We disagree with this principle. It is the poorer countries that need strong copyright laws to establish a local record industry. The Report acknowledges the growth of the software industries in India, ¹ as a result of strong IPR laws. Copyright underpins creativity.

Stephen Pollard, Senior Fellow at the centre for New Europe, writing in the Independent states: -

"strengthening IP protection would stimulate local invention and encourage overseas IP-holders to engage in joint projects and investments". ²

At the CIPR conference in February 2002 Deana Daley, a Jamaican attorney said: -

"The major policy premise for Caribbean countries is that copyright is critical to the development of local cultural industries. Such creativity, stimulates creativity and innovation offering the possibility of revenue generation. Of all the different forms of IPRs we see copyright as the most positive as offering us a potential comparative advantage". ³

Where IP laws are weak the talented musician does not get rewarded for his creativity. He has every incentive to move overseas and sign to a record label in a developed country. This results in a brain drain of creative talent. There is an increasing interest in world music in the developed countries. If this talent is to be developed in poor countries and not in the developed countries there must be copyright protection to provide the incentive.

The Report suggests that IPR protection of knowledge stops its dissemination. This ignores the fact that copyright protects individual creative works, not (as the Report does recognise) the ideas upon which artistic expression relies. Ideas can be freely exchanged without restriction under copyright law. Ideas therefore act as a spring board for the generation of new works and cultural diversity. These new works are protected to provide an economic return for the creators. This encourages more copyright owners to create in turn resulting in the creation of more music, recordings and other works.

What is the knock on effect of encouraging weak IPR systems? The view stated in the Report is as follows: -

"In the past, however, the evidence shows that weak levels of copyright enforcement have had a major impact on diffusion of knowledge and knowledge-based products in certain cases, such as computer software, throughout the developing world. Indeed, it is arguably the case that many poor people in developing countries have only been able to access certain copyright material through using unauthorised copies available at a fraction of the price of the genuine original product".

We disagree with this view. Applying this premise to the music industry means that countries can only develop by dealing in pirated music, which is an extraordinary conclusion.

What possible opportunity does this approach give to the development of local copyright works that in turn will help to develop and maintain cultural diversity to the benefit of the world?

1. Page 97 of the CIPR Report
2. "This is the Worst Way to Protect the Third World"
3. Session 4, CIPR Conference - February 2003

Piracy

The Patent Office is aware of the level of mass piracy threatening the music industry increased by the easy dissemination of digital recordings over the internet. The creation of copyright havens in developing countries exacerbates the piracy problem.

Internet penetration may not be large in developing countries but it only takes one internet connection to disseminate recordings across the world. The experience in the developing world is that piracy is now also a cottage industry. Individuals burn CDs for colleagues in the workplace and open up their entire collection of music to the world via peer to peer (P2P) networks.

It is also well established that music and record piracy is connected with organised crime. Countries with weak IPRs will attract organised crime dealing in pirate UK records and not a legitimate local record industry developing the talents of local artists.

Technical Measures

One of the keys to ensuring effective protection from piracy is to ensure the viability of technical measures to protect illegal copying of recordings. The success of such measures is more critical for small to medium size businesses and for developing countries. Large businesses and developed countries have additional means of protecting copyright, such as through traditional law enforcement.

These technical measures have to be protected. This has been recognised in the EC 'Copyright Directive (2001/29/EC)'. The Report notes that similar provisions are contained in the WIPO Performance and Phonograms Treaty 1996.

Yet, in the Report, developing countries are advised not to implement such laws.

No consideration is given to such countries developing their own record industry and protecting local recordings. The Report views the developing countries as consumers of copyright material prevented from accessing material. This is in itself an odd concept. The music industry is in the business of making recordings available to a mass audience wherever they live, not restricting legitimate access.

Conclusion

Strong copyright protection in developing countries is vital to the development of local cultural industries including the music and recording industries. Such protection also enables local artists to secure a fair return for the use of their work over periods which recognise the on going nature of the value of their work to others locally and further afield around the world. The existence of copyright protection will also prevent the brain drain of artists from developing countries to other areas where greater levels of protection are available.

The creation of copyright havens encourages piracy, often connected with organised crime, which is already damaging to the record industry. As international relay of information and works around the world becomes increasingly the norm, the importance of owners being able to rely upon and international system for the protection of their property becomes increasingly important.

We urge the Patent Office to oppose adoption of the Report as UK policy. We hope that any government response will recognise that the Report conflicts with currrentcurrent trade policy and undermines the work carried out by the Patent Office, working with WIPO and the WTO, to create strong IP laws throughout the world.

The British Phonographic Industry Limited.
November 2002.