Welcome to this week’s PA PA; with the UK Parliament still in recess, political excitement was derived from the European election results, where 10% of the UK electorate (27% of a 36% turnout) voted UKIP; meaning that 33% of the UK’s seats (24 out of 73) in the 751 seat European Parliament are Faragiste (if that’s a word). The right-of-centre EPP (29%) are the largest group in the Parliament ahead of the left-ist PSE (25%); giving the liberal group ALDE a potentially pivotal role with 8%.
Mike Weatherly MP, the Prime Minister’s Adviser on Intellectual Property, published a new discussion paper “Search Engines and Piracy” which outlined the role search engines play in “inadvertently guiding consumers towards illegal content” and which are therefore “well placed to be part of the solution” to online copyright infringement. Given its market share, the paper notes that Google should “take the lead in setting responsible industry standards” and help “promote and guide consumers towards legitimate content.” Amongst its ten recommendations the paper suggests that search engines should remove sites which are subject to High Court blocking orders from its search results, reduce the flow of advertising funds to infringing sites, introduce a formal reporting system for “auto-complete” terms and to develop means of introducing trust-marks for legal content on to search results. For its part, Google – which has an Appendix of suggestions of its own in the paper – calls for the ability to crawl licensed services to make it easier to promote them in search results. The report concludes that “piracy remains the biggest threat to the growth of digital commerce; if we want the UK to continue to be a leader in creativity and innovation, the UK must also be an international leader in IP rights protection.”
Although the report has no formal status within Government as such, it is nevertheless an important document in terms of outlining the state of play in the debate over search. As internet service providers and rightsholders come ever closer to an agreement on dealing with infringement, search remains a missing piece of the puzzle. A report from a the IP Adviser to the PM can leave all players in little doubt as to the increased profile and importance of the issue in Whitehall.
Readers coming to this note after the weekend will be doing so in the brave new world of the common commencement of the statutory instruments amending the copyright act. However, astonishingly (although on reflection, it’s hard to be truly astonished) the IPO has thus far refused to provide any further clarification of what the new law actually means (although at the time of writing it has three and a half hours of the working month left in which to do so). Despite various attempts from The PA and other parties to get some clarity, it remains unclear as to exactly what the provisions permitting publishers to maintain control, or definitions of lawful use actually mean. Edification may come eventually but it is likely to be too late for 1 June. Expect some frenetic activity on various blogs on this issue next week…
The High Level Expert Group on Taxation of the Digital Economy, as established by the European Commission in October 2013, has reported back with its findings . The report is principally focused on the over-arching framework of international taxation and its three specific recommendations are around harmful tax practices such as with-holding tax, transfer pricing and taxable nexus provisions. However, further into the report on page 40 (we recommend going straight to it, rather than being distracted by the pages on the small consignments exemption) attention turns to VAT rates on physical and digital goods. Here, the Expert Group say “…it agrees with the Commission that similar goods and services should be subject to the same VAT rate. However, in order to ensure that there is no further complexity in the VAT system….such similar products should be taxed at the standard rates, as already provided in EU VAT law, rather than a reduced rate.”
This suggestion was given a swift knock-down by the Vice-President of the Commission, Nellie Kroes, who noted in a press release that “personally I would prefer taxes are to be equalised downwards”. So two contrasting views: a high level expert group with an opinion which may carry weight; against the views of one of the EU’s most senior officials, but who only has a number of months remaining in her current role. And all of this is in any case backdrop to Commissioner Semeta’s DG Taxation Communication on VAT which is due for publication in the next several weeks. The FEP had this to say about it.
Orphan Works Licensing
Following the passing of the Enterprise and Regulatory Reform Act 2013, the IPO has been preparing the regulations to give effect to the measures on orphan works licensing (this is a parallel operation to that reported two weeks ago on the Extended Collective Licensing Scheme). The consultation on the regulations was held in February this year and the Government has now published its response to that exercise and can be read here. As well as implementing the new UK provisions the consultation is also looking at how to bring into effect the European Commission’s Orphan Works Directive which introduces a similar, narrower, scheme.
In the response the Government sets out a number of principles which had been up for discussion: (i) the IPO, rather than collecting societies, will operate the OW licensing scheme, at least initially; (ii) OW licences will not be transferrable; (iii) consideration will be given to developing a blanket OW licences, but critically not at the outset, and the requirement would always be maintained for a diligent search for each individual work (this conclusion is a vital step against any attempts to create a system which could permit unregulated mass licensing of works, orphan or not, but we will need to kick the tyres on what is meant be “consideration”;(iv) rightsholders will have eight years in which to come forward after which time Government will be able to distribute any unclaimed funds; (v) OW licences will be non-exclusive.
Who We’ve Met and Forthcoming Meetings
This week we’ve (sadly not all) have been in New York for Book Expo; next week we are meeting with John Alty CEO of the IPO, attending a Policy Exchange debate at Google’s HQ, and meeting with UCL.
As talks to get a similar system underway in the UK near completion, the US Copyright Alert Programme has reported on its first year of operation. 1.3 million alerts have been sent to US ISP subscribers in 10 months, 265 of them were challenged, with a mere 47 succeeding on the “it wasn’t me guv” defence.