‘(1) Section 170 of the Copyright, Designs and Patents Act 1988 (transitional provisions and savings) is amended as follows.

(2) At the beginning insert “(1)”.

(3) At the end insert—

“(2) The Secretary of State may by regulations amend Schedule 1 to reduce the duration of copyright in existing works which are—

(a) unpublished, or

(b) published but anonymous or pseudonymous.

(3) The regulations may provide for the copyright to expire on the commencement of the regulations or at any later time.

(4) “Existing works” has the same meaning as in Schedule 1.

(5) Regulations under subsection (2) may—

(a) make supplementary or transitional provision;

(b) make consequential provision, including provision amending any enactment or subordinate legislation passed or made before that subsection comes into force.

(6) The power to make regulations under subsection (2) is exercisable by statutory instrument.

(7) A statutory instrument containing regulations under subsection (2) may not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.” ’.—(Norman Lamb.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss the following:

Government new clause 13—Licensing of copyright and perforers' rights.

Government new schedule 1—‘Licensing of copyright and performers’ rights Regulation of licensing bodies.

Government new clauses 11 and 13 and Government new schedule 1 will amend the Copyright, Designs and Patents Act 1988. The copyright system is an important part of the UK’s social and economic infrastructure. Not only is it key to the business model of many creative industries, it also affects the sharing of information and culture by researchers, educators and citizens. As we discussed last Thursday when we considered the amendments of the hon. Member for East Lothian, if she is listening—

I am sorry.

No need to apologise. If she is correcting the voting intentions of the hon. Member for Leyton and Wanstead, that would be a good thing. I was thrilled for a moment that he might be willing to join us in a bipartisan spirit.

As we discussed last Thursday when we considered the amendments of the hon. Member for East Lothian, the copyright system even affects Members of Parliament with their fondness for tweeting. The Government want to ensure copyright makes the greatest possible contribution to UK economic growth and society.

Some have suggested that the Government’s proposals come as a surprise, which was the flavour of the shadow Minister’s rather mean-spirited comments last time. [Hon. Members: “Withdraw.”] I withdraw and apologise, but he suggested that the proposals were rather last minute and not thought through. Precisely the opposite is true.

I will set out the sequence of events that led to this point. The Hargreaves review of intellectual property and growth was commissioned in November 2010, and reported in May 2011 following seven months of extensive consultation with a wide range of stakeholders. The Government responded last August, and in a further follow up, we published a consultation on copyright in December 2011. That further extensive consultation with stakeholders concluded in March. We published the first part of our response to the consultation in June. All that is in marked contrast to the shadow Minister’s suggestion that the proposals have been introduced unexpectedly.

The Guardian reported on 18 May:

“Labour has called on the government to ‘stop dithering’ and move swiftly to liberalise archaic UK copyright laws…Ivan Lewis, the shadow culture secretary…urged the government to act to implement the recommendations of the report”.

We are doing precisely that, so no more carping from the Opposition suggesting that the process, which has resulted in legislative proposals, has not been full and deliberative.

Although I recognise that the Government new clauses relate to some of the Hargreaves review’s findings, they hardly implement the Hargreaves review. I hope the Minister accepts that.

There is more to come. This is the first tranche of Hargreaves’s recommendations, and we seek to implement the recommendations in an ordered and sensible way.

For those too young to remember, the Hargreaves review follows the previous Government’s Gowers review and “Digital Britain” report, which contained similar proposals but were not delivered. I say no more.

In his 2006 pre-Budget report, the then Chancellor said the Gowers review

“has considered the challenges of globalisation and technological change, and sets out a strategic vision of a system that is balanced, coherent and flexible, ensuring that the operations of the system work for businesses and consumers…The Government welcomes the Gowers Review and will take forward those recommendations for which it is responsible.”

That was in 2006. So far, so good, but nothing happened until 2010.

Our predecessors showed great foresight in introducing those proposals and commissioning the Gowers review. That was a good start, and now something has happened to implement the recommended changes.

I am rather confused because the Minister told this Committee on its 15th sitting, last Thursday, that the clause was

“not part of the wider Hargreaves work.”

He went on to say:

“The Government will make announcements about the outcome of that review and their response to it in due course”.––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 12 July 2012; c. 628.]

It seems, though, that these new clauses are part of the Hargreaves work. Will he clear up that confusion for us?

It is simply that our debate last week was not part of the Hargreaves recommendations. It was to deal with changes that may be required to maintain compliance with EU law. These now are the first tranche of proposals. There will be further announcements in due course on the implementation of the Hargreaves recommendations. These measures require primary legislation to implement them. Hargreaves concluded that

“the UK’s intellectual property framework, especially with regard to copyright, is falling behind what is needed.”

The review painted a picture of an IP system that is the foundation for a substantial proportion of the UK’s innovation and economic growth but that needs to adapt to meet the challenge of new technologies. As we said in our response, we share this concern. The copyright system needs to reward creators’ investment and encourage innovators to develop new products and services around creative content, and it needs to support consumers’ and users’ reasonable expectations. Decisions published in the first part of the Government response to the copyright consultation are at the heart of the new clauses and the new schedule, which I propose to move today. Decisions on the rest of the consultation, including copyright exceptions, will be announced later in the year, and so are not subjects on which I intend to spend any time today. In other words, they are matters that will be announced later on.

Professor Hargreaves was clear in his review that efficient markets for copyright licensing are strategically important to growth in this country. What we aim to do with these clauses is to modernise copyright licensing, putting in place measures that will give our licensing system the competitive edge and help UK creative industries  retain their world-beating status. This package of measures is designed to bring benefits for businesses, creators and consumers by making it easier to use copyright material to create value across the economy in society. These clauses and schedule will do three things: allow the creation of orphan works schemes to open access to potentially valuable material that currently cannot be licensed or used; put in place a voluntary regime for extending collective licensing to help reduce complexities in the licensing system; and reserve a power to introduce statutory codes of conduct for collecting societies if they fail to operate to minimum standards.

I shall turn first to the provisions of proposed new sections 116A, 116C and 116D to the Copyright, Designs and Patents Act 1988 in respect of orphan works in new clause 13. It benefits no one to have a wealth of copyright works being entirely unusable because the owner of one or more of the rights in the work cannot be contacted. Let me be clear that this is not simply a cultural issue but a very real economic issue that potentially valuable assets are not being used. It is also an issue of respect for copyright if those assets are being used unlawfully. The Government, therefore, want to introduce the measures to allow for both commercial and cultural uses of orphan works subject to satisfactory safeguards for the interests of both owners of orphan rights and rights holders who might potentially suffer from unfair competition from an orphan works scheme.

The British Film Institute stated, in its response to the Government’s recent consultation on copyright, that such a scheme would be

“very beneficial to the public, archives across the UK (including the BFI National Archive), researchers, academics and innovators.”

The Publishers Association stated in its response:

“The PA also supports a solution intended to facilitate both non commercial and commercial use of orphan works, provided this is based on due diligence and fair remuneration.”

Of course, we know that some concerns have been raised about how an orphan works scheme would operate. We have listened to those concerns and the Committee has my assurance that the following series of safeguards is incorporated in our proposals.

First, the scheme will not take the form of an exception to copyright. Instead, users will require authorisation by an independent body to use orphan works. The independent body will not itself be able to hold a licence to use such works; that is to say, there is no scope for self-licensing. A work can only ever qualify for authorisation as an orphan work after a diligent search for rights holders has been conducted. That is at the heart of our proposals. The person who seeks to use a work has to go out and search for the owner of the rights before seeking to get the work licensed under an orphan works licensing scheme.

Secondly, there will be a registry of orphan works, which will make it easier for rights holders to check whether any of their work is being considered or used as an orphan work, and it will enable them to regain control of their work—the copyright subsisting in the work.

Thirdly, licences to use orphan works will come at an appropriate price, comparable to that of similar known works being used in a similar way, and depending on the particular use being proposed. [Interruption.] I am concerned that the hon. Member for Hartlepool, who is  the shadow Minister and also a former Minister, is starting to yawn and I am worried that I am boring him. [Hon. Members: “No.”] He might be losing the will to live, but we are near the end and I encourage him to keep going to the bitter end.

Fourthly, licences will always be non-exclusive to avoid unfair competition. Finally, nothing in the amendment alters a rights owner’s moral rights. It will be assumed that a missing rights holder has asserted their moral rights and they will continue to be respected and protected accordingly.

As part of this package of measures on orphan works, new clause 11 will reform section 170 of the Copyright, Designs and Patents Act 1988. Existing copyright provisions for unpublished, anonymous and pseudonymous works mean that they remain in copyright until 2039 at the earliest. That creates the anomaly that works such as unpublished letters from the 19th century remain in copyright. For example, the British Library said in its response to the consultation:

“From the perspective of Library staff explaining this to a user, the fact that an unpublished medieval manuscript is still in copyright and has the same legal status as a current best-seller is extremely nonsensical and can result in challenging conversations.”

That is an interesting way of putting it. More orphan works could be made available for legal use if the Secretary of State harmonises the length of copyright term for them with the approach in European law. That would also help to solve the overall orphan works problem.

Let me turn to the amendments to the provisions in proposed new section 116B on extended collective licensing, which are also in new clause 13. These make provision to allow the Secretary of State, by regulations, to authorise voluntary extended collective licensing within the UK. Currently, collecting societies license copyright works on an “opt-in” basis.

Atishoo!

Bless you. We have been in each other’s company for so long now that we are all catching each other’s colds.

Extended collective licensing would allow qualifying collecting societies to apply to offer some non-exclusive licences on an “opt-out” basis. That means that, subject to rigorous safeguards, a collecting society that represents a significant number of rights holders could be authorised to license on behalf of all rights holders for a particular class of works. The absolute exception to that is where the rights holder says “no” to the collecting society by exercising his or her right to opt out of any ECL scheme.

Much evidence was submitted to the Hargreaves review and the subsequent consultation on copyright pointing to the time-consuming and expensive nature of rights clearance. The situation is being compounded every day in the digital age as increasing numbers of works are created. Users need more and more permissions and rights holders are finding it increasingly difficult to retain control over their works. ECL can help simplify rights clearance because it creates a one-stop shop where it is used. That saves time and money for both users and rights holders. For that reason, Universities UK described ECL as—

Atishoo!

My goodness, it is all over the place.

Universities UK said that ECL was

“part of the essential reform of copyright to suit the digital age” in their response to the recent consultation. The Government know very well that ECL may not be appropriate for all types of rights, or for all types of creative works. For example, we know that some copyright licensing, often for primary rights, tends to take place via direct negotiation between the rights holder and the user. Let me be clear that there is no intention to interfere with existing licensing models that clearly work for a sector.

Let me also confirm that ECL will be entirely voluntary for collecting societies. It will be entirely up to them whether to apply to use the system and to define the scope of their application. Under our proposals, there can be no imposition of ECL on markets that do not want it. It is also important that any ECL system will take account of the interests of rights holders in controlling how their work is used. To do that, there are four safeguards that we see as essential to any ECL scheme. First, a collecting society that wants to use ECL must be able to prove that it is significantly representative of the rights holders who would be affected. Secondly, it must secure the support of its members, who are themselves rights holders, for the application. Thirdly, it must have a code of conduct in place which meets the Government’s minimum standards. In itself, that will provide an incentive to raise standards, including protection for non-member rights holders. Finally, all rights holders must retain the capacity to opt out of an ECL scheme. Some respondents to our consultation felt that that safeguard should be enshrined in statute. We have listened; I can confirm that subsection (3) of new section 116B has that effect.

New schedule 1 inserts schedule A1 into the Copyright, Design and Patents Act 1988 and requires a collecting society to put in place a code of conduct which meets certain criteria. Where a collecting society fails to introduce an appropriate code, there is a reserve power for the Secretary of State to put one in place. Again, we are trying to provide an incentive for a code of conduct to be put in place by the collecting authority. I want to be absolutely clear that the Government recognise the value of collective licensing and the role played by collecting societies.

Collecting societies and the services they provide are central to the monetisation of copyright, but we all know that the system is not perfect. The Hargreaves review noted that they tend to be monopoly suppliers in their sectors, and that there is evidence that practice could be improved in some areas. Hargreaves argued that greater protection was required for the members of collecting societies and their licensees. All that was corroborated by evidence to the recent copyright consultation. Minimum standards of transparency and good governance are, in a sense, ends in themselves. They are good principles for how to operate. It is hard to argue that they are not a good thing, and that was reflected in the broad consensus in the copyright consultation about the need for minimum standards.

This reserve power is designed to support a system of self-regulation in which collecting societies self-regulate through codes of conduct that incorporate minimum  standards set by the Government. I can assure the Committee that it will only ever be used to put in place a statutory code where a collecting society’s own system of self-regulation fails. In other words, this is simply an insurance policy for members and for licensees of collecting societies when voluntary self-regulation fails. If a code is breached, members of collecting societies and their licensees have no option to shop elsewhere if they want to license their rights collectively or to buy a collective licence. In essence, we want them to have the type of protections that consumers dealing with monopoly suppliers in other sectors enjoy. We want to be able to guarantee that they enjoy these minimum standards, and this is what the reserve power is designed to do.

Users of the system were almost unanimously in favour of this reserve power. As the Federation of Small Businesses pointed out in its submission,

“There is little point for collecting society codes being purely voluntary because collecting societies are monopolies. Therefore a statutory backstop and enforcement is essential.”

Of course, if self-regulation is effective then this reserve power will not need to be used. I am confident about the prospect of effective self-regulation, given the work that has been done by collecting societies on codes of conduct, under the auspices of the British Copyright Council. I applaud that work.

The schedule also amends schedule 2A of the Copyright, Design and Patents Act 1988 to ensure that the orphan works and extended collective licensing schemes also apply in respect of performers’ rights. Much of the operational detail about how orphan works, extended collective licensing, and the reserve power on codes of conduct will operate will be contained in regulations that we will develop. That will go through the full consultation process and ultimately be subject to approval by Parliament. In developing these we will, of course, continue to involve those affected fully, through an existing informal working group of users and collecting societies and through wider consultation, to ensure that the views, knowledge and experience of stakeholders are central in shaping the detail of these schemes. I thank hon. Members, on the whole, for staying with me.

I shall not detain the Committee for too long. We discussed on Thursday, in debating clause 56, many of the issues that have been set out very thoughtfully and in detail by the Minister this afternoon. I put on record then our concern about the broad Henry VIII powers that the Secretary of State was giving himself. To some extent, new clause 11 arouses similar concerns about the broadest possible powers.

The power to reduce duration of copyright in transitional cases in new clause 11 allows a Minister to reduce the term of copyright protection in a work at any time. When the 1988 legislation was going through Parliament, the view was expressed in the other place that existing copyright owners should not suddenly find themselves with a right less valuable than the one they already enjoyed. That important principle was set out in Parliament 25 or so years ago. How will the Minister reconcile what was said then to what has been proposed now? What consultations will take place in respect of the reduction of the term of copyright protection?

As I said, the matter is of some concern, and I think we will return to this on Report. We have not tabled any amendments. I do not intend to divide the Committee  on this, but there are some concerns that we would like to explore further on Report. I suspect that the other place would like to do so as well. I was taken by what the Minister said about new clause 13. He provided some reassurance. There are concerns here, but I just have a few questions about what he said. He mentioned the need for an independent body. Who or what is the independent body? He mentioned the need for a diligent search? That was an interesting phrase. What does that constitute? Is “diligent” the same as the test of reasonableness in law? Will somebody have to demonstrate to a court that they carried out a reasonable test? The Minister mentioned the example of an unpublished medieval manuscript being under copyright as for a modern work and said how ridiculous that was. What role will proportionality play in what is to be carried out here? The Minister also mentioned the registry of orphan works. Forgive my ignorance, but how will that be compiled? What tests of completeness will be undertaken?

Those are the three broad points I would like to have clarified. However, what the Minister said was quite reassuring. I give notice that we will come to this at a later stage in the Bill. We want to reflect over the summer and look at it again on Report. I am interested to hear the Minister’s response to the questions I have posed.

I am grateful to the shadow Minister for that response. First, the independent body that will authorise and license orphan works and verify searches has yet to be determined. However, it will be an independent body and there will be a full consultation.

A quango.

There has to be a licensing authority for this purpose. We are unleashing through this significant potential economic activity, as opposed to the sort of organisation the hon. Gentleman proposed earlier. However, I enjoyed his intervention from a sedentary position. There will be no self-licensing.

The hon. Gentleman also asked what would constitute a diligent search. There will be further consideration of how exactly the scheme would operate before setting it out in secondary legislation. Extensive thought has already been given to what should be done in a diligent search for different sectors, including by the European digital libraries initiative. It is likely that searches would differ across the various sectors, and therefore sector-specific guidance may need to be developed. Existing industry databases, registries and bibliographic publications are just some examples of sources of information that could be searched. If the digital copyright exchange finds favour with industry and becomes a reality, it is likely that a search of that would be an essential part of any diligence search. Searching on such an exchange should be cheaper than searching a variety of unconnected databases.

I am getting pieces of paper thrown at me from every direction.

Are they under copyright?

They will definitely be recorded for posterity. The point has already been made that the registry is where the works will be registered after the diligent search has been undertaken, and the details will be consulted on.

Mr Wright rose—

Let me make one point and then I am happy to give way. The hon. Gentleman’s chide from a sedentary position was that I was creating a new quango. It could be an existing body, such as the Copyright Tribunal, so there may be no need to establish a new body. There will need to be an independent licensing authority that will have responsibility.

I thank the Minister for giving way. I think he just said that the registry would reside with the person who has the register. I am not sure if I am correct. Am I right in thinking that the user who wishes to exploit copyright works without first clearing them would be the actual owner of the repository of the works? Is that correct? Have I understood that in the right fashion?

Copyright remains where copyright always has been in an orphan work. It is just that the rights holder cannot be found. Nothing about an orphan works scheme changes copyright. Indeed, the mechanism that would be established after full consultation would create a foundation for the owner perhaps to be discovered. A work, perhaps a photograph or some other artistic work, may be exploited—in the best possible sense—by being licensed through an orphan works scheme and appearing in the public domain lawfully for the first time, because to do so at the moment would be unlawful. The original rights holder may then identify his or her photograph and reassert their rights and take back control of their work. This mechanism empowers the owners of orphan works to do something that is currently denied to them by the fact that the work simply cannot be used because no one can get authority if the rights owner cannot be found.

The registry will help to reduce the number of orphan works and allow rights holders to check whether works are being used as an orphan. If someone took a photograph that was being exploited by a third party that had secured a licence to do so, that owner can periodically search through the list of orphan works that have been licensed and may spot the piece of work that they own the rights to and be able to assert their right. It is an empowering process.

We have had productive conversations with a wide range of stakeholders, and the hope is that the process will develop as we draft the secondary regulations that will implement the scheme. The Bill creates the powers to establish the scheme. The detail will follow through secondary legislation. [Interruption.] More stuff is coming; this is a very efficient operation. If someone wants to use an orphan work, they undertake a diligent search, which is verified by the independent authorising body—

Quango.

Which may be an existing body.

Existing quango.

The licence fee is paid based on the best assessment of the value of the work, and the money is held for the original rights holder, so that if they emerge, it can be handed to them. The work can then be used, and the authorising body registers the orphan accordingly.

In my original line of questioning, I mentioned “diligent search” and “proportionality” and cited the example of a mediaeval manuscript and the British Library asking whether it was an inappropriate use of resources. Will the Minister talk a little bit about proportionality and how that will constitute part of the criteria for a diligent search?

I come back to the catch-all defence, which is that all of this is to be determined through regulation and that there will be a thorough consultation. Obviously, proportionality is essential and what is a diligent search for one type of work may be inappropriate for another, so that proportionality must be secured. The principle is clear that people should try hard to find the original rights holder. The detail of what that will entail and the guidance that people will be offered will be developed through secondary legislation, subject to consultation. We will hopefully then have a scheme that is proportionate.

The Minister is asking us to do an awful lot on the basis of a nod and a wink and a “Trust me, I’m a Minister.” It is of some concern that the powers are quite broad and that everything will become clear in regulations and secondary legislation. Will the Minister give us a timetable for the consultation and the laying down of regulations to give us an indication of whether the matter can be debated at some length later in the progress of the Bill, whether on Report or in the other place?

I do not have a detailed timetable. We do not have a clear timeline for the implementation, although obviously I want to ensure that we make speedy progress so that we can put a scheme in place as soon as possible. It is a bit churlish of the hon. Gentleman to suggest that it is all based on trusting the Minister. He will know very well, and as a former Minister he will remember, that it is not appropriate to set out the detailed arrangements for a scheme in vast sections of primary legislation. It is appropriate for secondary legislation, and it will be voted on in this place.

I agree absolutely that we must get the balance right between primary and secondary legislation, but the benefit when one is designing detailed scheme rules is that if during the use of those rules it becomes apparent that some tweaking is necessary to make them work sensibly, it is easier to do so than to wait for a moment to introduce primary legislation, which might be two years down the line. We are introducing the flexibility to ensure that the scheme works effectively.

We want to take time to consult thoroughly. We have already begun the consultations with stakeholders, but we want to make progress to ensure that the scheme can be implemented. I end by repeating that—

Chi Onwurah rose—

Oh. Excitement.

Before the Minister concludes, I want to echo the concerns of my hon. Friend the former Minister and ask whether we can have a little more detail on the funding of this new quango, which could be an existing quango. The Minister made it clear—well,  I think he made it clear—that the money gathered from licensing will be retained for the authors, which implies that the quango will not be funded from the licence money. Can he confirm whether that is the case?

Again, these are all things that will be consulted on. One source of funding that will be available and could be used for the purpose is a proportion of the payments made for the use of orphan works that will never be retrieved by the original licence holder, for instance if the person has disappeared or never discovers that the work has been licensed for use. The question that must be asked is what happens to the money held for people who do not emerge. One option—no decision has been taken—is that it could be used to help fund the licensing authority. All the options will be examined thoroughly in due course.

I end by—[Interruption.] I was about to end. On the question of unclaimed licence fees, I suspect that I have largely made the point that there will be further consideration, with input from stakeholders, of the details of how it will work. The authorising body will hold unclaimed licence fees in an escrow account. As the amount could build up to something substantial, it will probably be appropriate to allow for a certain amount to be withdrawn after a certain period. Possible uses for unclaimed fees could include subsidising the cost of running the orphan works scheme, paying for preservation costs in public institutions or paying for industry training. There is a range of different uses on which we will consult in due course.

The new arrangements introduced by the Government new clauses and new schedule will be valuable. There is cross-party agreement on Hargreaves and the potential economic value of implementing his recommendations. It has the potential to unlock economic value and make use of things that at the moment, frustratingly for everyone, cannot be used lawfully. It has real potential, while at the same time safeguarding the rights and interests of the rights holder. On that basis, I hope that the Committee will support the new clauses.

Question put and agreed to.

New clause 11 accordingly read a Second time, and added to the Bill.