BSAC

BRITISH SCREEN ADVISORY COUNCIL
February 12 2003

RESPONSE TO REPORT OF THE COMMISSION ON INTELLECTUAL PROPERTY RIGHTS: "INTEGRATING INTELLECTUAL PROPERTY RIGHTS AND DEVELOPMENT POLICY"

EXECUTIVE SUMMARY

FORMAL RESPONSE: The members of the British Screen Advisory Council ("BSAC") wish to respond formally to the report of the Commission on Intellectual Property Rights ("Commission") entitled "Integrating Intellectual Property Rights and Development Policy" ("the Report").

STATUS OF THE REPORT: The members of BSAC urge all interested parties, including the Patent Office, the Department for Trade and Industry and the Department for Culture, Media and Sport, to take necessary steps to inform properly interested parties on a national and international level as to the status of the Report. Namely, that the Report (whilst a learned and interesting contribution to the development debate) comprises the views of a panel, and does not represent the views, or carry the endorsement, of the UK government.

DURATION OF COPYRIGHT: Our members question the Report's view that there is no clear economic rationale for the duration of copyright protection. This does not take account of the economic realities of the creative sector, nor that the length of copyright protection is mitigated by the development of permitted exceptions and fair dealing.

INTERNATIONAL INFRASTRUCTURE: Our members believe that to the extent that the Report advocates a path for developing nations not based on harmonisation, and existing multilateral agreements and international organizations, it is at odds with UK and EU policy on copyright matters.

STRONG PROTECTION OF IPR: It is, in the view of our members, incorrect to encourage developing nations to legislate for weaker levels of IPR protection as against those established by WIPO and TRIPS. Weak IP laws deny reward to those involved in the creative processes behind the development of audiovisual product, which can lead to a "brain drain" of creative talent overseas and a dilution of the talent pool in developing economies.

UNAUTHORISED COPYING: The Report does not, in our members' view, take sufficient account of the fact that piracy in developing countries harms the potential for growth of a thriving domestic creative sector, and a reduction in copyright protection may have the effect of creating copyright havens, which in turn damages the ability of more developed markets to grow their legitimate industry.

INTERNATIONAL TREATY OBLIGATIONS: The tone and substance of the Report suggests that developing countries "should" exploit flexibilities under international agreements, rather than "may" use these flexibilities, and our members believe that emphasis is incorrect. Our members believe that the message to be sent to developing countries ought not to be one recommending breach of international treaty obligations.

PROTECTION OF RIGHTS ONLINE: In advocating an inconsistent international approach to rights protection in respect of encryption, technical protection measures and digital rights management, the members of BSAC are concerned that the recommendations of the Report, if implemented, directly challenge the ability of local rights owners to protect their rights, and the economic viability of our members' own businesses due to the global nature of the internet.

Introduction

BSAC is an independent association representing a broad church of interests including the leading UK figures in film, television, satellite, cable and digital media.

Several of BSAC's members have already submitted their own responses to the Report at the invitation of the UK Patent Office. In anticipation of the publication of the definitive official UK government response to the Report, the primary objective of this paper is to present the broad consensus of the opinion amongst BSAC members.

The activities of BSAC members are spread globally, and as such BSAC is directly interested in the general Terms of Reference by which the Commission prepared the Report (including how national IPR regimes may best be designed to benefit developing countries within the context of international agreements, how the related international framework of rules and agreements might be improved and developed and the broader policy framework needed to complement intellectual property regimes). However, this paper is restricted (except as otherwise indicated) to the immediate issues raised in Chapter 5 of the Report, entitled "Copyright, Software and the Internet", and related parts of the Report.

BSAC members acknowledge the valuable and important work of the Commission in researching and compiling the Report. The Report is a learned and interesting contribution to the development debate. BSAC members recognise that in certain circumstances, the rigid enforcement of IPRs in relation to agriculture, health and forms of traditional knowledge ought not to be pursued without a serious and objective assessment of its development impact and that, unlike the developed world, developing nations often lack the economic strength and infrastructure to overcome associated problems.

BSAC members fully support many of the Report's proposals in relation to avoiding the negative impact of the enforcement of higher IP rights on research, education and health.

Copyright protection

The Report recognises that copyrights are "an essential element in the business model of publishers, television and record companies, and software producers" because they afford their owners exclusive rights over the reproduction and distribution of protected works. Further, the Report acknowledges that copyright (by preventing unauthorised copying) remains the basis by which the making and publishing of work is an economically viable proposition across both the developing and developed world. For all of BSAC's members, copyright is the fundamental right upon which their industries are based, and without which their industries could not survive.

BSAC members are therefore disappointed that the Report suggests that "there is no clear economic rationale for copyright protection being so much longer than that for patents" (1). This view, in the opinion of our members, fails to take proper account of the economic realities of the creative sector, and in particular the fact that it is only the use and distribution of works over an extended period that can secure a fair return for use which is vital for the support of research and development of new content, and the maintenance of diversity in the audiovisual field.

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. However, as the Report recognises, the length of copyright protection is mitigated on an international level by the development of permitted exceptions and fair dealing (or 'fair use') doctrines in circumstances where the fair return for rights owners can reasonably be overruled by public interest in terms of access.

BSAC members recognise that balances to copyright protection are important, but are concerned that the Report advocates a hostile approach to the existing system which would, in the view of our members, be detrimental to their creative industries at a time when instantaneous worldwide accessibility to copyright works is increasingly becoming the norm, with the associated effect on our members businesses associated with unauthorised digital copying (2) on a global scale.

In many of the developing countries on which the Report focuses its attentions, levels of piracy are already at levels which dwarf legitimate copyright exploitation. It follows that, in the view of BSAC's members, this is not a time for international protection of intellectual property to be weakened. Conversely, it is only with the support of governments in the developing countries that havens for those operating piracy operations can be challenged, and legitimate business together with avenues for the progression of local culture developed.

International architecture

In the final chapter of the Report, the Commission focuses on how permitting developing countries to tailor their intellectual property regimes to particular economic and social circumstances can be accommodated within the complex international architecture of multilateral, regional and bilateral intellectual property rules and standards. The members of BSAC support the existing multilateral agreements, international organizations, regional conventions and bilateral arrangements.

In particular, our members support the multilateral agreements administered by the World Intellectual Property Organisation ("WIPO"). We would ask government to take note that WIPO's primary function, endorsed by government at both the UK and European Union ("EU") level, is to "promote the development of measures designed to facilitate the efficient protection of intellectual property throughout the world and to harmonize national legislation in this field". To BSAC's members, it appears that to the extent that the Report advocates a path not based on harmonisation, the Report is at odds with stated UK and EU policy on copyright, itself the product of detailed debate and negotiation over many years.

Developing countries have representation at both WIPO and the World Trade Organisation ("WTO"). The Report makes recommendations to improve that representation, which BSAC members would endorse. However, the Report goes further, by questioning the underlying agendas of these organisations. The Report states that "WIPO is, by its founding charter, solely concerned with the promotion of IPRs. Its objectives and functions do not include a development objective" and concludes that a more balanced approach to the analysis of IPRs would be "beneficial to both the organisation and the developing world, which forms the majority of its membership". However, the Report does not take full account of the fact that WIPO itself has organised numerous initiatives to promote intellectual property rights in developing countries. In the view of our members, such support is critical to the growth of developing markets, since whilst many (but by no means all) developing countries lack the domestic expertise and business skills to bring audiovisual products to global markets, cultural industries have grown faster than any other areas of economic activity and (as noted in the Report) intellectual property protection can stimulate local creative efforts, building local expertise by ensuring rewards for artists and other rights holders.

WIPO has also promoted the ratification of the WCT and WPPT. Developing countries have 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 undoubtedly have an abundance of creative talent (a point emphasised in the Report), collective management could translate this talent into a source of foreign exchange earnings. BSAC's members believe the potential economic value of such earnings is under-emphasised in the Report.

The desire to protect intellectual property rights in general

The Report concludes by recommending that the retention of freedom to legislate for weaker levels of intellectual property rights protection as against those established by WIPO and TRIPS is better for developing countries.

BSAC members disagree with this principle, as we believe that it is the poorer countries that need strong copyright laws to establish a local audiovisual industry. The Report itself appears to support this belief through an acknowledgement (3) that the growth of the software industry in India owes much to the existence of strong IPR laws. We consider this a perfect example of how copyright can be used to underpin creativity and jobs.

In this regard, we would note with approval the comments of Stephen Pollard, Senior Fellow at the centre for New Europe, writing in the Independent, that: -

"strengthening IP protection would stimulate local invention and encourage overseas IP-holders to engage in joint projects and investments" (4).

We would further note the contribution, at the CIPR conference in February 2002, of Deana Daley, a Jamaican attorney, as follows: -

"The major policy premise for Caribbean countries is that copyright is critical to the development of local cultural industries. Such protection 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” (5)

Simply stated, the view of BSAC's members is that where IP laws are weak those involved in the creative processes behind the development of audiovisual product do not get rewarded for their creativity. In such circumstances there is every incentive to move overseas and work for an organisation in a developed country, contributing to a "brain drain" of creative talent and a dilution of the talent pool in developing economies. In the view of our members this would be a negative step in an era in which there is increasing interest in the cultures of developing countries and the creative output of the people who embody those cultures. If 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 also suggests that the protection of knowledge via intellectual property stops its dissemination. Our members respectfully submit that this overlooks the fact that copyright protects individual fixations of creative works, not (as the Report does recognise) the ideas upon which artistic expression relies. Mere ideas can be freely exchanged without restriction under copyright law. BSAC members believe that ideas act as a spring board for the generation of new works and cultural diversity, and it is these new works which should correctly be protected to provide an economic return for the creators, creating a "virtuous circle".

The Report attempts to describe what the Commission deem to be the knock-on effect of encouraging weak IPR systems 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”.(6)

The members of BSAC do not agree with this view. Applying this premise to the audiovisual sector means that countries can only develop by dealing in pirated videos and DVDs, which is, in the view of our members, an unsupportable conclusion, allowing little opportunity for the development of local copyright works that in turn promote and maintain cultural diversity.

It follows that BSAC members are concerned that the Report may be construed as showing a lack of regard for the interests of rights holders in developing countries. Rather than promoting the benefits of a framework for local and international protection of intellectual property, the Report concentrates its efforts on highlighting the need for developed nations to ensure that access to content is enabled. It is of some concern to our members that there is little recognition in the Report of the steps taken by rights holders to accommodate, and take reasonable steps to interpret in a practical way, the flexible provisions provided through international treaties such as TRIPs.

Unauthorised copying

For some time now, it has been widely known that the level of mass "piracy" threatening the music industry has been exacerbated by the easy dissemination of digital recordings over the internet. As communications technology improves and the cost barriers to online connectivity are lowered, these problems have also begun to affect the audiovisual sector. The creation of copyright havens in developing countries undoubtedly aggravates this problem, as both the music industry and the film industry have already experienced in relation to the operation of unauthorised online music and/or film distribution websites in jurisdictions hostile to copyright protection.

Although internet penetration may not yet be large in some developing countries, it only takes one internet connection to disseminate works across the world. The internet can also support copyright infringement in a way far removed from traditional film and music piracy operations. It is open for individuals to use cheap, standard equipment to burn video CDs and DVDs for friends and colleagues in the workplace, and likewise to open up their entire collection of films and music to the world via peer to peer (P2P) networks.

It is also well established that video and music piracy is connected with organised crime. Countries with weak intellectual property regimes will attract organised crime dealing in pirate UK discs and not a legitimate local creative industry developing the talents of local artists.

The Commission believe that piracy in the developing countries has a lesser economic effect than piracy in developed markets, and is therefore less significant when considering a relaxation of the copyright protection that might otherwise be put into place in a developing country. Our members disagree, and take the view that piracy harms the potential for development of a thriving domestic creative sector. There are many artists from African, Asian and South American countries for whom piracy at a local level, due to a reduction in copyright protection, would harm their work at both local and international levels. Furthermore, it is the experience of many BSAC members that, where piracy is rife in developing countries, illegitimate copies move across borders, and can harm the ability of more developed markets to grow their legitimate industry.

The use of technical measures to protect copyrighted works

With the advent of digital technology, and the combination of both the ease with which perfect copies of works can be made together with the explosion in the growth of the internet, BSAC members have come to conclude that one of the keys to ensuring effective protection from digital piracy is to ensure the viability of technical measures to protect illegal copying of recordings.

Moreover, our members believe that, if anything, 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. However, as recognised in the EU Copyright Directive (7), technical measures have to be protected. The Report notes that similar provisions are contained in the WIPO Performance and Phonograms Treaty 1996.

BSAC members are therefore concerned that the Report advises developing countries not to implement laws prohibiting the circumvention of technological protection measures, which does not, in our members' opinion address the need for such countries to develop their own audiovisual product and protect local fixations.

Our members believe that in dismissing the implementation of anti-circumvention legislation, the tone of the Report does not pay sufficient regard to the debate which had taken place surrounding the adoption of the Copyright Directive, and the balances which had been regarded as important for the use of technological measures against the background of that legislation.

The Report appears to view the developing countries as consumers of copyright material prevented from accessing material. BSAC members are in the business of making their product available on a legitimate basis to a mass audience wherever they live, and are not in the business of restricting legitimate access.

Final Comments

Following publication of the Commission's Report, our members have digested its contents with considerable interest. There is much of value in the Report's findings, although we do feel that the principal signal being sent to developing countries with respect to intellectual property is unnecessarily negative. Regretfully, the majority of our members find themselves taking issue with many of the Report's fundamental conclusions in the ways explained in this paper.

BSAC's members believe that strong copyright protection in developing countries is vital to the development of local cultural industries, including all participants within the audiovisual sector. Through the existence and enforcement of such protection, local companies and individuals are able to secure a fair return for the use of their work over periods which recognise the ongoing nature of the value of their work to others locally and internationally. The existence of copyright protection can also help to prevent the brain drain of creativity 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 entertainment industry. As international relay of information and works around the world becomes increasingly the norm, the importance of owners being able to rely upon an international system for the protection of their property becomes increasingly important.

The Patent Office has been active in promoting strong copyright protection in developing countries and we are concerned that all its achievements to date, for example in the commonwealth countries, might be undermined by the Report. BSAC members appreciate the work of the Patent Office with WIPO and the WTO to establish an equal level of copyright protection all over the world. The Report's conclusion that "developing countries would probably be unwise to endorse the WIPO copyright treaty" suggests returning to a level of minimum protection which diminishes the UK government's achievements so far for the entertainment industry and other copyright-based industries.

BSAC is concerned to ensure that the official response of the UK government should clarify that the recommendations made by the Report do not represent or reflect formal, approved UK government policy. BSAC members feel it ought to be clarified that the Report comprises only the views of a panel, and not those of the UK government. There is considerable concern that the translation and dissemination of the Report on an international basis might give the impression that the Report already has the endorsement of the UK government, which we know not to be the case.

BSAC members believe that the importance of this distinction cannot be overstated in the context of potential confusion (both domestically and overseas) and would urge all interested parties, including the Patent Office, the Department for Trade and Industry and the Department for Culture, Media and Sport, to take whatever measures are deemed necessary to avoid any misapprehension as to the status of the Report. Our members hope that in any case the official response of the UK government will represent the definitive statement of UK policy on the matters covered by the Commission's work, and would hope that the necessary budgetary allocation can be made to facilitate the translation and dissemination of such to all interested parties who took delivery of the original Report.

Our members also believe that it is vital to ensure that the conclusions of the Commission, whilst making stimulating and provocative reading, should not spill over into any formal proceedings in the sphere of international intellectual property regulation. In short, our members' fear that the overriding conclusion that may be drawn from both the tone and substance Report – whether intended by the Commission or not – is that developing countries are being recommended to break international treaty obligations.

By way of example, the underlying message throughout the Report appears to be one suggesting that developing countries "should" exploit flexibilities under international agreements, rather than "may" use these flexibilities. We consider that it would be highly unfortunate if developing countries were moved to fail to comply with TRIPS provisions agreed in previous rounds of negotiation, or were to proceed to resist adoption of the WIPO treaties.

A great many BSAC members are also deeply troubled by the approach taken by the Report to the protection of their intellectual property rights in the online sphere. Whilst there is rightly a certain degree of flexibility afforded by TRIPS in relation to adoption of provisions for traditional local market, it is essential that a different methodology is embraced as regards encryption, digital rights management and other technical protection measures in the online world. Our members believe that "havens" without a consistency of approach to rights protection in this environment directly challenge the economic viability of their businesses in other territories due to the global nature of the internet and digital networks (8).

Issued: 12 February 2003
British Screen Advisory Council
13 Manette Street
London W1D 4AW
Tel: 020 7287 1111 Fax: 020 7287 1123 Email: bsac@bsacouncil.co.uk

(1) Chapter 1, page 19
(2) In the view of our members, this is 'piracy'. We note that the Report considers that term "perjorative" but we would note that the same term has been used by the EU throughout the debate on copyright development (including in the recitals of the Copyright Directive 2001/29/EC)
(3) Chapter 4, page 97
(4) "This is the worst way to protect the Third World", The Independent, 17 September, 2002
(5) Session 4 – CIPR Conference, London – February, 2002
(6) Chapter 5, page 112
(7) 2001/29/EC
(8) This paper was written by Nick Fitzpatrick, a partner at Denton Wilde Sapte, with the kind help of Stuart Levene, also of Denton Wilde Sapte