Laurence Kaye on Digital Media Law: Hargreaves, the Digital Copyright Exchange

Dear reader

Professor Hargreaves and his team are to be congratulated for delivering the Review on ‘Intellectual Property and Growth’ on time, focused on the key issues and, as Professor Hargreaves puts it, for never losing sight of David Cameron’s ‘exam question’: “Could it be true that laws designed more than three centuries ago with the express purpose of creating economic incentives for innovation by protecting creators’ rights are today obstructing innovation and economic growth?”

The Review Team’s answer to that question is “yes”. “We have found that that UK’s intellectual property framework, especially with regard, to copyright, is falling behind what is needed.”

It is certainly true that Hargreaves does call for UK copyright law to be updated to implement changes recommended in the Gowers Review, including a limited exception for format shifting, extending library archiving for audio visual works and sound recordings and adding an exception for parodies which is permitted under the EU Copyright Directive.

So why do I conclude that, despite Hargreaves’ 10 recommendations for changes to copyright law - many of which are needed – the Review proves that UK law isn’t a barrier to innovation? I say that for two reasons. First, the ‘Digital Copyright Exchange’ called for by Hargreaves is technical and business challenge, not a legal one. Second, the source of the key legal changes which are needed, such as those for orphan works and for cross-border collective rights management, is Brussels and other international fora, not the UK. At best, UK can be an advocate for change, a role which it should definitely undertake.

There’s also a follow-on point. Whilst the technical infrastructure will find and deliver content for all purposes, the legal framework to drive cross border automated rights permissions and management will need to distinguish between commercial and non-commercial use. For instance the legal solution for orphan works proposed by Brussels in its recently published Proposal for a Directive on permitted uses of orphan works deals with orphan works in online digital libraries. Voluntary licensing solutions will be required for commercial use.

The Hargreaves’ ‘big idea’ is the ‘Digital Copyright Exchange’ (“the DCE”) He has correctly identified that what’s needed in the digital age is a fast, secure and reliable licensing exchange; a one (or just a few) clicks to search, find, clear and download copyrighted or copyright-free content. Hargreaves wouldn’t claim that this is a patentable invention – it’s what all sectors in the creative industries are calling for.

Hargreaves has deliberately not been prescriptive about the DCE. Does he have in mind a giant ‘one stop’ superstore for creative content or is it closer to a giant “phone book’, a point to look up and find rights and repertoire databases, and associated payment systems, across the globe, more like the Internet’s domain name system? Perhaps he has in mind a combination of the two. The Report refers to a “marketplace” and states that “The aim is to establish a network of interoperable databases to provide a common platform for licensing transactions.”

Spot on. But either way, the challenge in bringing this interoperable network into being is essentially a technical and business one, not a legal one, although there are some legal fixes required, such as for orphan works.

Hargreaves definitely sees the DCE as an opportunity for UK to take the lead. “The Review’s judgment is that the Government has a severely time limited opportunity to bring about in the UK the best copyright licensing system in the world.” Whilst Hargreaves is clear that bringing the DCE into being isn’t a job for Government procurement, he does advocate a legal ‘carrot and stick’ approach. For instance, he proposes that damages for copyright infringement should be greater for works available through the licensing exchange than for others.

This brings us back to asking, what would the UK’s DCE look like? The truth is that the DCE cannot be a single ‘one stop’ superstore, generating lots of cash for UK plc. If the Internet is a network of networks, the DCE can only be a ‘node’ – database(s) - in an international network of content nodes, a place to exchange and find information about content held elsewhere as well as acting as a registry of data such as about orphan works.

You can get a sense of this network from the European Commission’s description of ‘ARROW’ - Accessible Registries of Rights Information and Orphan Works – part of Europeana, a project of a consortium of European national libraries, publishers and collective management organisations.

As the ARROW website explains “Solutions envisaged by the venture include the establishment of systems for the exchange of rights data, the creation of registries of orphan works, information on or registries of works out of print, supporting the creation of a network of rights clearance mechanisms. Key to achieving this objective is interoperability, standards deployment and stakeholder involvement.”

The European Commission’s Proposal for a Directive on permitted uses of orphan works also gives a clear picture of the collection of databases which together make up this emerging infrastucture. The Directive will create a framework for lawful, cross-border online access to orphan works contained in online digital libraries. It will do this by requiring a single ‘diligent search’ (e.g. via ARROW) to establish whether or not a work is an orphan work, specifying permitted uses of orphan works within public institutions such as public libraries, educational establishments, museums and archives and then making provision for extended collective licensing for the use of orphan works for these purposes.

If you read the Annex, you can get a picture of the range and diversity of cross sectoral databases that will be used for carrying out a diligent search.

So the point about the DCE is that it can and will only form part of a very big, cross border network of databases. And that’s the point. Copyright in the 21^st century is global. Rights information has to be exchanged between databases across the world which means that we need standards for interoperability. The adjustments – not fundamental changes – we need to the legal framework have to be driven at international and not national level. To be fair, the Hargreaves Review recognises that. And if it encourages the IPO and the UK Government to take a lead in calling for industry-led solutions to achieve this, then it will be job well done.

Laurie Kaye