UK government proposal to modernize copyright underlines failure of EU approach to hostage works

The UK Government has published a Government Policy Statement based on the recent Consultation on modernising Copyright held in the UK. The document summarizes the findings of the consultation and outlines policy actions that the UK government intends to take. The policy statement (pdf) covers three fields where the government intends to legislate: ‘Improvements to copyright licensing’, ‘Extended Collective Licensing’ and ‘Codes of Conduct for collecting societies’:

The Government, following the Hargreaves Review, made a number of proposals to make copyright licensing more efficient and remove unnecessary barriers to the legitimate use of works while preserving the interests of right holders. These include schemes to allow use of ‘orphan’ works whose copyright holder cannot be found or is unknown, voluntary extended collective licensing, and introducing minimum standards of conduct for collecting societies, underpinned by a backstop power to impose a statutory code of conduct on a collecting society where required.

These measures bring some currently unlawful or unlicensed activities within the scope of legal activity, allowing licensing to occur and thus benefiting right holders and licensees alike. They have potential to cut costs and improve compliance with copyright law, and to improve confidence in the UK copyright system.(p.7)

In the light of the discussion about the ‘Orphan works’ directive the first two of these should be of interest beyond the borders of the Island Kingdom.

Hostage works

The section on ‘improvements to copyright licensing’ is a bit misleadingly titled since these improvements are aimed exclusively at finding a solution for the hostage works problem. The policy statement outlines the problem in such a clear cut fashion that it is worth quoting at length:

The Government’s position, following the Hargreaves Review, is that it benefits no-one to have a wealth of copyright works be entirely unusable under any circumstances because the owner of one or more rights in the work cannot be contacted. This is not simply a cultural issue; it is also a very real economic issue that potentially valuable intangible assets are not being used, and an issue of respect for copyright if they are being used unlawfully. The Government therefore proposed an orphan works scheme that allows 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 could potentially suffer from unfair competition from an orphan works scheme. (p.7)

This analysis of the problem is spot on and it is nice to see that the UK government explicitly recognizes the economic aspects of the hostage works problem. The solution outlined by the policy paper is not entirely surprising either. The UK government follows the diligent search approach that also underpins the EU directive. While the policy statement is not sufficiently detailed to fully evaluate these plans, a number of positive aspects stand out when comparing the proposed approach to the compromise text of the EU directive.

From the text of the UK policy statement it appears that the government intends to apply a less restrictive definition of diligence when it comes to searches that need to be carried out by prospective rights holders. It intends to balance this with the obligation to pay license fees for uses of orphan works and to hold these fees in escrow for a certain period of time on behalf of possible reappearing rights holders (the “Awaiting Claim” approach):

  • Diligent search before something can be used as an orphan work is key to the scheme. The Government believes that it is important to strike the right balance between a relaxed standard of diligence and for an “awaiting claim” approach, as against ensuring that absent rights owners’ needs are protected. The Government is mindful of the need to ensure the process is sufficiently straightforward to be useful to potential users. The authorising body will verify the diligence of the searches.
  • Commercial and non-commercial uses of orphan works in the UK will both be permitted, both to maximise the economic potential of proposals and because making a firm distinction between the two is difficult in practice.
  • This permission should come at an appropriate price – a market rate, to the extent that one can be established (though the difficulties that may attend establishing that, for example in respect of works not created for publication that are in museums’ collections, are noted).
  • This price should be payable in advance (or at agreed times if there is a royalty element) and set aside for any rights holders who may still appear even after a diligent search has not found them.(p.8)

As long as the standards for a diligent search have not been determined and as long as the licensing fees have not been established (which can be notoriously difficult as pointed out by Hugenholtz and Korteweg in this study) it is difficult to say what the effect of this will be on mass digitization projects and use of hostage works by memory institutions in general. In any case this approach should create much more certainty and predictability than the approach chosen by the EU. In addition this approach also enables commercial uses of hostage works—a clear advantage over the EU approach.

How this approach relates to another important criticism raised by COMMUNIA—the fact that there is only a very limited list of potential beneficiaries who will be allowed to use hostage works under the EU directive—is not entirely clear from the UK policy statement. At first reading it appears that use by parties other than existing memory institutions might be possible, but we will need to wait for further details later in the legislative process. Needless to say we would urge the UK government to explicitly endorse use by a broader set of beneficiaries.

All in all these are substantial improvements over the proposed EU directive. The UK government recognizes this by making it explicit that the scope of uses enabled by their proposal is wider than the one of the EU directive (although the part about the exception is a bit confusing since the EU directive requires implementation in the form of an exception):

The scheme will not take the form of an exception to copyright, but will be based on authorisation by an independent body, i.e. not the same body which wishes to exploit the orphan works.

The UK scheme will be compatible with the emerging European system, as set out in the draft Directive, but broader in applicability (in particular allowing commercial use in the UK) to maximise potential benefits to the UK. (p.9)

It’s unfortunate that these extra possibilities and the less stringent approach will most likely not be implemented at the EU level, but at least the UK proposal points to an approach wherein more progressive member states will provide additional room for users of orphan works within their own territorial boundaries. This of course will lead to further splintering of EU copyright legislation which will make it more difficult for the EU to finally create a single digital market (one could argue that this means that with the orphan works directive the Commission has not only failed to address the issue it wanted to address, but that it has also shot itself in the foot doing so).

Extended Collective Licensing

Extended Collective licensing (ECL) is often seen as a different approach to the hostage works problem and the larger copyright issues presented by mass digitization projects. The European Commission has largely sidelined this approach with the orphan works directive (although Article 1.2c of the proposed directive ensures that the two approaches can coexist). Many memory institutions view ECL as a very promising approach and therefore it is good to see that the UK government is proposing to introduce legislation that will allow ECL arrangements on a voluntary level. Having this approach available alongside the diligent search model provides memory institutions and rights holders additional options to manage large scale digitization projects and to operate in the digital environment.

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