CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 245-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

INNOVATION, UNIVERSITIES AND SKILLS COMMITTEE

(SUB-COMMITTEE ON THE COPYRIGHT TRIBUNAL)

 

the work and operation of the copyright tribunal

 

MONDAY 28 jANUARY 2008

MR RICHARD COMBES, MR NIGEL WARBURTON, MR DOMINIC MCGONIGAL

and MR TIM PADFIELD

MR IAN FLETCHER, MR EDMUND QUILTY, MR ANDREW LAYTON

and HIS HONOUR JUDGE FYSH QC

 

Evidence heard in Public Questions 1 - 105

 

 

USE OF THE TRANSCRIPT

1.	This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2.	The transcript is an approved formal record of these proceedings. It will be printed in due course.

 

Oral Evidence

Taken before the Innovation, Universities and Skills Committee

(Sub-Committee on the Copyright Tribunal)

on Monday 28 January 2008

Members present

Dr Ian Gibson, in the Chair

Mr Tim Boswell

Mr Ian Cawsey

Dr Brian Iddon

Ian Stewart

Mr Phil Willis

________________

Memoranda submitted by Libraries and Archives Copyright Alliance,

Phonographic Performance Limited, Intellectual Property Office

and Authors' Licensing and Collecting Society

 

Examination of Witnesses

 

Witnesses: Mr Dominic McGonigal, Director of Government Relations, Phonographic Performance Limited, Mr Richard Combes, Head of Rights and Licensing, Authors' Licensing and Collecting Society, Mr Nigel Warburton, Author, Authors' Licensing and Collecting Society and Mr Tim Padfield, Chair, Libraries and Archives Copyright Alliance, gave evidence.

Chairman: Thank you very much for coming to this Select Committee hearing. You will know the procedures, that we cross-question you, it is all recorded and everybody reads it. I think this is rather unique in a sense that you have never really been in front of a select committee that I am aware of in terms of the Copyright Tribunal. I may be wrong, but this is a good chance I think for you to put over some of your ideas when we question you. Before we start on questions we need to declare any interests. I chair the All Party Writers Group in the House.

Mr Boswell: I am Vice Chairman of the BBC Group and I am also involved with the Friends of the National Libraries.

Mr Cawsey: I am an officer of the All Party Music Group.

Q1 Chairman: Perhaps our witnesses would now introduce themselves.

Mr McGonigal: I am Dominic McGonigal; I am from PPL which is the licensing body for the record companies and artists.

Mr Combes: I am Richard Combes from ALCS which is the collecting society for writers.

Mr Warburton: I am Nigel Warburton, I am writer and I have also served on the board of ALCS and am currently on the board of CLA.

Mr Padfield: I am Tim Padfield. I am rather different from these gentlemen. My day job is at the National Archives where I advise on copyright but for this purpose I am the Chair of the Libraries and Archives Copyright Alliance which represents various bodies in the libraries and archives communities who deal with copyright.

Chairman: Thank you very much for coming here. Ian Cawsey will open up.

Q2 Mr Cawsey: Good afternoon gentlemen. I will start with a nice general question to open up with. Is the Copyright Tribunal operating in an effective manner? Is it ensuring that disputes are resolved quickly? If there are shortcomings in the system how serious are they?

Mr McGonigal: I am very happy to kick off if that is okay with my colleagues. I think there is a general recognition that the Copyright Tribunal was set up some time ago and actually things have changed in the intervening decades. As you will know the IP Office commissioned their own review of the Copyright Tribunal in response to a number of concerns from all sorts of stakeholders in the Tribunal and the reality now is that the copyright business, the creative economy, is a huge part of UK plc and is a major economic driver. The issues that the Copyright Tribunal are looking at have huge significance. What was set up several decades ago is generally recognised not to be necessarily right for today where there are significant commercial interests at stake. The way we view it is very much a party versus party arbitration system rather than a tribunal and indeed the IP Office review looked at it in the same way and came up with a number of recommendations to turn it into a proper court like function that can resolve commercial disputes when they arise.

Mr Combes: I think that Dominic has already explained that it is providing a different function than that originally envisaged when it was first conceived. In terms of the question as to whether it is operating effectively, the test for a body such as this which has to intervene and arbitrate in disputed matters is: is it operating fairly? I think a lot of the recommendations in the Intellectual Property Office report were certainly aimed at rebalancing the function provided by the Tribunal. In particular a recommendation that we would raise in that regard is the recommendation that licensing bodies themselves, in the introduction of new licences or new schemes, would have the opportunity to approach the Tribunal themselves rather than being solely a right for the user. I think that speaks very much to the first recommendation from the report which spoke of the need to give balance to the way the Tribunal approaches disputes and also to give each party an even hand and even and fair chance in the process of those disputes.

Mr Warburton: As a writer my main concern is that fair payment for use and anything which is expensive and time consuming within the process could potentially affect the fairness of that payment when it comes through to a writer. I thoroughly support the recommendations from the IPO Review which seems to be moving in the direction of streamlining the operations of the Tribunal.

Mr Padfield: I suppose, not surprisingly, I have to differ from my colleagues to a certain extent. I have to agree that a body to which one side can appeal but not the other does seem unfair, but on the other hand I am not at all convinced about the idea of making it seem more and more like a court. We already have quite a lot of courts dealing with copyright issues. I would be much happier to see less formality rather than more. As it is the Copyright Tribunal is expensive. The Universities UK case cost the university side, as I understand it, something like £800,000 and that seems to be a lot of money for something which has not even gone to court. It also took ten days of hearing so quite a lot of time as well. I am not sure that more formality is required; on the whole I would prefer to see less.

Q3 Mr Cawsey: Do mean something of a mediation type?

Mr Padfield: Something of that sort or, interestingly, the possibility perhaps of an ombudsman to deal with questions between parties or complaints by one party or the other. That might be a more attractive solution.

Q4 Mr Cawsey: Is there any other support for the idea of a mediation or ombudsman type service?

Mr Combes: I think as a cost cutting exercise and a process-simplifying measure, arbitration and mediation available at a reasonable level before the final recourse to a full tribunal hearing is certainly something that has merit in terms of streamlining the process before the referral itself.

Mr McGonigal: One of the important recommendations from the IP Office Report was the introduction of civil procedure rules and that, I think, would streamline a lot of the cases and bring in active case management. Dealing with some of the points from Tim Padfield, active case management would get rid of any frivolous claims at an early stage and would also ensure that there was a speedier process to resolution with all parties providing relevant information rather than everything just in case it comes up in the hearing.

Q5 Mr Cawsey: Can you give us an example of how the shortcomings of the Copyright Tribunal are affecting creative artists in this country?

Mr Combes: A lot of the recommendations on streamlining the current process of how the Tribunal work to a certain extent speaks to how the organisations that represent individual creators are placed to represent the interests of their members - be it writers, composers, artists - at the Tribunal itself. It is clearly a very costly process, a heavy legalistic mechanism. To a certain extent it is almost impossible for an individual creator to use that facility and are therefore reliant on their representative bodies, be it collecting societies who are representing them through licensing. Even then those bodies are generally not for profit organisations run for the purpose of their individual members and are not necessarily in the best position to benefit from an overly costly process. Certainly in the more recent referrals that we have seen the parties who have brought references to the Tribunal are large international media organisations who are obviously well placed to use the process as it currently stands. A lot of the measures in the IPO Report aimed at simplifying and reducing costs and reducing process would indirectly benefit the individual creator through the greater abilities that it gives their representative bodies.

Q6 Mr Cawsey: Tim, you did not seem to be agreeing with that.

Mr Padfield: I entirely agree with the thrust. The intention is to reduce the costs and to make it simpler but I cannot see how making it more like a court will do that. I would say that the courts are even more expensive and take longer. Certainly going to court is not a pleasant process and I would say that people would be less inclined to go if it looks more and more like a court.

Q7 Mr Willis: Richard, in passing you raised the idea of the ombudsman. In fact it was SCONUL who also supported very strongly the idea of an ombudsman. Do you think putting that process in so that there is step before getting to the Tribunal, would in fact speed up the process and give justice, particularly to what I would call the individual performer who seems to be totally left out in this unless they are part of a larger collecting society?

Mr Combes: I think the Intellectual Property Office Mediation Service is aimed at that second tier down from the full tribunal level. I think that is probably a question of resource and experience. My understanding to date is that that has been largely concerned with other intellectual property matters such as patent and trademark disputes. If it is actually to fulfil a function in a tier below the Tribunal perhaps that needs greater resource to be able to take on that work that is currently addressed by the tribunal process.

Q8 Mr Boswell: Just a simple point to clarify in my own mind - you will appreciate we are lay people in this - the Tribunal issues are about the fair licensing of rights rather than are there evidential issues about the existence or otherwise of rights and their attribution to particular persons. When we discuss ombudsmen or mediation or whatever, there is a sort of intermediate tier which says, "This is a pragmatic solution; it would be sensible for all parties and reasonably fair to adopt it", which might not have too much relevance to the law and might not even require legal intervention. If you are in a head-to-head about who is entitled to what and/or whether the terms of a particular licence are reasonable, it does tend to end up with lawyers and I presume that nearly all the work in the Tribunal is actually conducted by lawyers rather than intelligent lay people other than the lay members of the Tribunal.

Mr McGonigal: I think that is a very important question because the reality is that the Tribunal is absolutely dealing with those commercial disputes. The Tribunal gets involved when the two parties cannot agree, for whatever reason, on what the price is, what the terms of the licence are, how much you will be paid for music or for photocopying or whatever it is. Dealing very quickly with the mediation ombudsman point, you cannot usually isolate a particular case so if, for instance, one hairdresser or a pub has a problem with PPL and says, "We do not want to pay the £52.50 a year to play music" it comes to PPL. Fine, that is a dispute between that hairdresser or that pub and the PPL. If a mediation service intervenes in that and comes to a decision, that would affect every other pub in the country. Although you might be thinking that you are dealing with an issue that is £100 actually it is about the entire sector and it is several hundreds of thousands or millions of pounds.

Q9 Mr Boswell: You do need lawyers for that.

Mr McGonigal: Yes, that is what happens.

Q10 Mr Cawsey: Nigel, do you have an example of how creative artists in the country may be adversely affected by the system?

Mr Warburton: Clearly any delay in the process and mounting costs are effectively taking money which might otherwise go to creative artists, as we have already seen in lawyers' fees and increased use of executive time on the licensing organisation's managerial side. I do not have a specific example but generically there is a problem whenever there is a delay in payment made.

Q11 Mr Cawsey: Dominic, in the evidence from PPL you seem to cast some doubt on the fairness of the Copyright Tribunal, implying that copyright users are given the benefit of the doubt. Is that a fair understanding of what you were saying? Are Tribunal hearings fair?

Mr McGonigal: I think it goes back to when the Tribunal was set up. The mere fact that it is called a Tribunal implies there was a feeling that collecting societies were monopolies, they needed to be controlled in some way and the poor little user needed somebody to look after them. In fact the cases that come before the Tribunal are between large parties, between a licensing society like PPL or CLA and a big organisation be it a broadcaster or the British Beer and Pubs Association or BEDA representing the entire nightclub industry. They are major parties that are in a commercial dispute. It is no longer the situation where one party needs to be controlled because it has a negotiating advantage, it has a balance of power in the bargaining situation. That is why, to us, it is a straightforward commercial dispute. It is about two parties that have not been able to agree and you need some kind of a court process to work out what is a fair price for that use of copyright material.

Mr Padfield: I would say that that is actually true, that the Tribunal does tend to hear the big cases, which is unfortunate because it means the small cases tend not to be heard; people are put off bringing the small cases because they do not feel they can afford or they do not dare.

Q12 Chairman: What happens to them? Do they just disappear into the ether?

Mr Padfield: That is right. I might mention a specific example. Recently there was a significant dispute - the rights and wrongs of which I will not go into - between the CLA and NHS over whether the NHS should have a licence and a licence was eventually taken out. The CLA seemed to my members to be putting forward a view of copyright law which was its own interpretation of the law but which was not necessarily what the law said. I am not saying it was not correct but it was its own interpretation of the law and there was no means of someone else saying what their interpretation was. They were simply writing to librarians in this case saying, "This is the law; this is what research means in law" and it was simply their interpretation of what research means. There is no means of challenging that.

Q13 Mr Cawsey: Between you you have all articulated a lot of problems that have grown up over the years with this system. Why do you think it has proved so difficult in the last 20 years to actually effect a reform of the Copyright Tribunal?

Mr Padfield: I do not think anybody has tried.

Q14 Mr Cawsey: You think it has just gone on for no better reason than that?

Mr Padfield: I think so.

Mr McGonigal: I think that until last year nobody really looked at it and now the IP Office has done the report which is a very thorough report and went back through every single case that the Tribunal has ever looked at, all the evidence, all the judgments et cetera. I think this is really the first time that has been done.

Q15 Mr Willis: From a lot of the evidence we have actually received in this inquiry - I confess to being a novice in this particular area so forgive me if I ask a rather naïve question - it does look like the collecting societies hold a monopoly in this area. They are the people who really have the power and that is what needs to be challenged. You seem to be rather worried about that challenge. Is that right?

Mr McGonigal: I am not worried about any challenges. You are absolutely right, we have a monopoly and there is a very good reason for that. It is because both the users and the rightsholders want us to have a monopoly. We are a straightforward service organisation aggregating the rights so that any music user can get a single licence covering the entire repertoire. In our case the entire repertoire is sound recordings. The pub we referred to earlier has to get one licence to play music for the entire year and that is the entire catalogue, rather than three and a half thousand licences from three and half thousand record companies.

Q16 Mr Willis: Once you have agreed that in fact you are a powerful monopoly and that is your specific role - I understand that; it is not a criticism, it is just a statement of fact which you have agreed with - it is very difficult to know how in fact you move this on. My second question is really about the move over the last 20 years but particularly over the last five years into a totally different digital world that we are now operating in. All these regulations were set up in a by-gone age and you seem to be defending the past rather than in fact creating a platform for the future. There seem to be two distinct positions, one that we extend the copyright arrangements even more draconically into the whole business of digital media in its broadest sense, or we actually now have a terrific change, we take the print's view of saying "Let us do something totally different in terms of actually creating one of the most hugely creative and liberating frameworks". Where do you all stand on that digital divide?

Mr McGonigal: Can I take one step back on that? If you start from the basis that actually musicians or authors or actors or anyone else should be paid for what they are doing, you are absolutely right that in the digital age that presents us with a real challenge. There is no longer live performance where the performer turns up and gets paid for that performance. They make a recording, that recording gets used throughout the world by all sorts of people that that performer has never seen and never will see. If you start from the basis that those performers should be paid then you need some kind of mechanism for doing that. I think actually the role of the collective licensing bodies is going to become more important in the digital age. Let me give one specific example within the PPL arena. Within our environment we used to have two performer distribution societies called PAMRA and AURA and that was complicating things. It was making it difficult for the performers, et cetera, et cetera. We decided to merge those with the agreement of all the performers and indeed the record companies. It was decided that this was the way forward, bring them all together, create a single body within PPL for all 47,000 performers and all the record companies. We did that: we went to the Office of Fair Trading and told them about this, put it forward as a merger, they did a few months of investigation when they actually talked to all sorts of people (we kept getting phone calls saying they had been in touch) and they gave a complete green light, no conditions whatsoever, to effectively the creation of a bigger monopoly because it has all the economic advantages and efficiencies both for the rightsholders and for the users.

Mr Warburton: From the point of view of creators I do not think most of us are concerned about what is in the black box as long as it delivers adequate incentive for us to carry on creating. It is important that a system which works and which could be transferred to the digital age as we now see it is not abandoned for the sake of an idea which may not be as effective as that in terms of delivering incentives to creators. My concern, particularly in a fast changing environment where almost monthly some new device or new potential evolves for communicating written, spoken, visual images and so on, would be that we do not abandon a system that seems to be working, that actually does deliver incentives to creative artists for the sake of the hope that we can come up with a modern solution which may be past its sell by date within months.

Q17 Mr Willis: When artists like Lily Allen start recording in a basement flat and putting their stuff out on the net, they were doing it as creative performers. It is only afterwards that the business takes over. The issue I am interested in is how in fact do we maintain this high level of creativity within a system which seems to be quite frankly going in the opposite direction?

Mr Warburton: ALCS did commission some research on incomes of writers and in the 24 to 35 year old age group the typical earnings of a writer was £5000 a year which is, by any standards, inadequate. This means that any loss of earnings or any expectations that they could work for less than that could actually undermine the drive to creativity. Because some people can afford to produce highly creative work in a new medium does not mean that everybody should be obliged to do that. If you were to have a vibrant creative community of writers there needs to be some possibility of earning money from writing directly.

Mr Padfield: I have a lot of sympathy for the need to provide some recompense to writers; they are entitled to it, they have created these works. There are a lot of difficulties, though. Certainly in the library community we find that collecting societies in general, if I may put it in that way, have been reluctant or perhaps their members have been reluctant to allow digital licensing because they are nervous, as we understand it, they are scared of what the consequences are. However, so far as we can see it it is inevitable that we are going to be moving in that direction.

Q18 Mr Boswell: Am I not right in saying that there is a problem about the licensing of digital rights in relation, for example, to a conversion for people with visual impairment. Is that now resolved?

Mr Padfield: There is now a special exception for visually impaired.

Q19 Mr Boswell: That rings a bell but it had to be negotiated and eventually legislated for.

Mr Padfield: That is right.

Q20 Chairman: Richard, would you go along with Dominic to some extent, would you?

Mr Combes: To address Phil's original point about how we move from an analogue age into a digital based age and move the structures that worked in one era into the next, it is probably worth noting that this is not taking place in terms of copyright policies in a vacuum. There is a detailed report in the last 18 months, the Gowers Review of Intellectual Property which, to a certain extent, has looked at addressing areas where there is now a need for the existing structures of collective licensing in the case of the type of fees that ALCS receive for writers, a large portion of this comes from the CLA and Educational Recording Agency schemes - that are designed to find a way of making work available to students in education in return for a fair fee. Of course the repertoire of work that is available is incredibly broad and offers the facility of a licence at a single point. What Gowers has done has really put the onus on licensing societies and users - in this case education - to find ways of crossing over from the previous models into delivering so-called e-learning solutions so that copies of works are now available on school course intranets and on websites for students. The thrust of that really is developing the existing structures rather than saying that technology has overtaken us and there is nothing we can do about it. I think that there are initiatives in train and now the onus is on the existing licensing partners to actually work those through and deliver them.

Q21 Dr Iddon: I think there were 30 recommendations in the IPO 2007 Review of the Copyright Tribunal; I just want to examine one or two of those. The first one is that the reasoning behind licences and tariffs should be clearly shown and "this must be based on hard facts and figures, actuarial calculations and projections". If fees are based on what the market will bear, do you believe that this recommendation can be achieved? In other words, is it capable of real implementation?

Mr McGonigal: Yes. In all our negotiations we absolutely take that approach. What you are trying to do to find the value - in our case of music - to that business, whether it is a pub or a broadcaster. It is no accident that most of the commercial radio stations play music. In fact about 70 per cent of their programming is music. Ofcom, when they were looking at radio, wanted to find out what people liked about radio and number one was music; that is the main reason for choosing a particular station and presenters come in at number two. Using choice analysis and economic modelling you can actually come up with at least value ranges for the music element within a lot of businesses. A couple of years ago it was very interesting when we revised all our tariffs for the pubs playing background music. There is a very famous pub chain which does not play music but all the others play music and they play it for a very good reason. The publican had a front page outburst at PPL putting up its fees and then had quotes from three landlords, all of which basically said, "This is outrageous, how can they charge £300 for the music; if we turn the music off we'd have no customers". I think that is an illustration of the value.

Q22 Chairman: It is cheap at the price.

Mr McGonigal: Yes, that is £300 a year. That is less than £1 a day. The job of the Tribunal then is if there is a dispute over whether it should be £300 or £350 and the Tribunal has to look at where the value is and where to split that effectively between the creators and the users.

Q23 Dr Iddon: The Review also envisaged that the Copyright Tribunal, with the extra resources the Review recommended, should take an active part in formulating criteria for the objectification of the criteria for the conditions of licensing schemes or licences. With the two staff recommended by the Review, is that possible? What level of expertise would those staff require?

Mr McGonigal: We agreed with this recommendation with an important qualification that the Tribunal should look at those factors that were relevant in a particular case, but we did not think it was appropriate - or a good use of public money actually - for the Tribunal to look at every single licensing scheme that might come up. The reality is that we are licensing several hundred thousand sites across a whole range of different tariffs for different types of businesses using music in a different context and we have a team of rights negotiators who work on that day in day out. Most of them never go anywhere near the Copyright Tribunal. It is really only in those cases where there is a Tribunal in the offing where it would be useful for the Tribunal to say those kinds of factors they were looking at for a valuation.

Mr Combes: The Review referred to building up a bank of knowledge - and clearly that would not be something that could not happen instantly - but once these two additional staff members were in place I think it would certainly be valuable to understand the differences between the types of collective licensing schemes that are available and likely to become the subject of references to the Tribunal. A rolling level of expertise would be valuable in that regard.

Q24 Dr Iddon: Both the rightsholders and the users, of course, have opinions, but the 2007 Review is recommending the use of only one single expert unless there are compelling reasons not to go down that route. Is that reasonable?

Mr Padfield: It would be difficult to find one, to find an expert who is able and willing to be expert for both sides,

Q25 Dr Iddon: Could you elaborate on what the real problem is behind that?

Mr Padfield: I would say that part of the problem is the interpretation of the law. The statute involves interpretation; it lays down areas where there is protection and areas where there are exceptions and limitations but it does not say precisely what the boundaries of those areas are. For example, a user may use material for non-commercial research but it does not say what non-commercial research is and that is a matter for interpretation and ultimately, when it comes to it, only the court can decide whether what is being done is research in this particular context at this particular time.

Q26 Dr Iddon: In the case of a dispute between rightsholders and users, where both sides would want to produce an expert witness and they were available, do you think that is feasible under this recommendation? Would the Tribunal accept that? Is that a compelling reason?

Mr McGonigal: We considered this and our view was that it is desirable to have a single expert witness in the case of a specific point. That really comes back to the case management that if the judge or whoever it is hearing the case has a specific point they want to look at and a single expert is appointed for that, then we think that could work. However, you are absolutely right that in the lead up to the Tribunal - you have to remember there is an awful lot goes on before anything reaches the Tribunal - there will probably be months and months of negotiation, both sides would have prepared their own view of the economics of the situation and the financial value of what they are dealing with and both sides would want to put that to the Tribunal.

Q27 Chairman: Why does it have to be an expert? Why not a lay assessor of some kind? A man or woman off the street who has a brain and knows a bit of ethics and morality when they see it?

Mr Padfield: Or indeed a lay member of the Tribunal. I sympathise with that view; I find it odd that the Review has recommended removing the lay members.

Chairman: I think that as soon as you say "expert" it sounds like bias in some sense.

Q28 Mr Boswell: I would like to add something here too but I ought to declare the interest as an ex-lay member - a specialist lay member - of a tribunal which I left some 25 years ago, not in this field. I would like to hear the Panel's view as to the existence of laity, they are going to be pretty expert by the time they have had a couple of hearings. Does that add value? Is that the best way of adding expert value or, as it were, a degree of independence from this specifically legal input? Does it complicate things by making it even more ponderous? I think that may be one of the factors behind the recommendations to move it.

Mr Padfield: I cannot pretend to have any experience of lay members, but I would have thought it would give you the experience of a practitioner, a person who is actually or potentially involved at an active level. I hate to say that judges are aloof but they cannot know the details of what life is like at a practical level.

Q29 Mr Boswell: Would you like to say a work or two about the interaction between the Tribunal recommendation and the Department of Justice? There is the Intellectual Property Office who are sort of the sponsors and oddly enough the tribunal I was on was actually sponsored by a government department and administered by it. The move, which I suspect may have a tidiness in recommendation to move to the Department of Justice where most tribunals are in modern conditions, is that sensible? If so, could the Tribunal continue to be resourced by the IPO and how would it work?

Mr McGonigal: We have certainly been recommending a move just as a matter of propriety to separate the policy making functions of the IP Office - which is obviously a very important role - from the court function of the Tribunal.

Q30 Mr Boswell: Of course the budget would transfer as well.

Mr McGonigal: I would presume so.

Q31 Mr Boswell: Can I ask something about orphan works? The one thing I really want to get out of this is the handle on orphan works. I think it would be terribly handy if you could give us an example of an orphan work and tell us the sort of operational difficulties that arise? Are we talking mainly literary copy or conceivably recordings? That is one thing. What is the best solution, a licensing system or an exception solution? If it is going to be exception who is going to handle it? If you are going around licensing people by exception as it were, do you have a chance of recovering some resource from that as against going to the author? If there is an orphan could you have a system whereby you collected fees for the exceptional licences and you paid them either to persons when they were able assert their rights which they could not initially, and/or to help run the system?

Mr Warburton: I think there is a prior question of what exactly an orphan work is, exactly what process has been undergone before it is declared an orphan. A suspicion that a work is orphaned should not be enough.

Q32 Mr Boswell: To put it another way, if somebody is a publisher and not the author, how on earth are they going to know? Is this an orphan work, we do not know? Is it Anon who has written it or is someone under a pseudonym? Does it actually mean you are stopped from publishing quite a good piece of literature or music because you do not know who it is and you might be attacked if you did?

Mr Padfield: I would suggest that there are some categories of work where you might almost say it is obvious they are orphan works. If your grandmother had written to the Department of Health 60 years ago and that letter survived, that is a copyright work. I think it might be difficult to identify the owner of the rights in your grandmother's letter. Speaking as an archivist, there are record offices round the country with hundreds of thousands of works of that sort, almost all of which are orphan works effectively when you look at them.

Q33 Mr Boswell: Does that give rise to any practical difficulties?

Mr Padfield: Absolutely. I can give one other very common example which is true in libraries as well as archives, that is documentary photographs. The vast majority of documentary photographs have no identification of the author or the press agency or something of that sort; you simply have a photograph of a city street which lots of people want to print but there is no way of identifying the rightsholder.

Q34 Dr Iddon: Does that mean that there are pots of money lying around that have not been transferred to the copyright owners? Have you got bank accounts with unclaimed money in them?

Mr Combes: Part of the process of a society such as ours giving a broad mandate to the licensing agencies and giving, as I described earlier, a blanket mandate for the broadest possible repertoire, to a certain extent we are giving a mandate on behalf of all writers of works who are not explicitly excluded from the scheme. The challenge that we have before us then is having received information that a certain work has been subject to a licensed act such as copying within an institution, if they are not already part of the organisation - we have 60,000 writers on our database - then we do have dedicated staff who put in train a process of tracing that member. At any given time certain sums may be unattached to a particular writer, although it is part of the function of a collecting society to do the necessary research to ensure that they are paid.

Q35 Mr Boswell: If they are never claimed what happens to them?

Mr Combes: To a certain extent, because we are a society of members, our ultimate responsibility in setting policy for anything and particularly something as serious as dealing with money, is always a matter for our members. We are governed in terms of distribution rules and distribution policy by the writers we represent so if we were to take a decision to apply money for a course for writers, for example, then clearly that would be something that the executives of the organisation would take a view on taking out to the membership.

Q36 Mr Boswell: Just to be clear, if you have not actually been able to pay it out because you do not know who it is, the income has arisen and it is then in your reserves and you might be able to use a discretion on behalf of your known members.

Mr Combes: Subject to it being a prudent use as agreed by our members.

Q37 Chairman: Are places like Kew Gardens full of material like this?

Mr Padfield: Yes, there are hundreds of thousands of such works. May I just answer one question which you raised as to whether it should be a licensing or exception solution, my answer would be both. In many cases there will be a licensing solution; libraries and archives would certainly welcome that.

Q38 Chairman: If I go to Kew Gardens to look at some drawing of some scientific thing I would have to pay for it; I would have to pay for looking at it.

Mr Padfield: You have to pay to get a copy of it from the archives but if you want to publish it you would probably have to go to DACS (Design and Artist Copyright Society) to get a licence to publish it.

Q39 Chairman: Who fixes the fee?

Mr Padfield: DACS does. The difficulty - which is why I say the answer is both - is that there are many types of work where there is no society to represent the writer, like your grandmother; there is no-one to represent the author of an unpublished letter.

Q40 Mr Willis: Is there a time limit?

Mr Padfield: Ultimately the time limit is the expiry of copyright, but if they are unpublished they are in copyright until 2039 at the earliest, which is a bizarre aspect of our copyright law[1].

Chairman: Thank you all very, very much indeed for coming along and confusing us slightly more but also clarifying many issues.

Witnesses: His Honour Judge Fysh QC, Chairman, Copyright Tribunal, Mr Ian Fletcher, Chief Executive, Mr Edmund Quilty, Copyright and IP Enforcement Director and Mr Andrew Layton, Trade Marks and Designs Director, Intellectual Property Office, gave evidence.

Q41 Chairman: Thank you very, very indeed for coming along. I think you were here for the first part so you have seen the formalities of the whole situation; you are very welcome to say what you like. I will ask you first of all to introduce yourselves.

His Honour Judge Fysh: My name is Michael Fysh. I am the Judge of the Patents County Court for England and Wales. I have a science background but, like all the patents judges, we regard ourselves rather as failed scientists, nonetheless we do our best. I am also Chairman, of course, of the Copyright Tribunal, a job that I have had for just over a year now. I have had a number of cases, one major case which might interest the Committee is the Downloading Case which yielded a decision of some 70 or 80 pages and that was delivered at the end of last year. I have a couple of cases sub judice and one of them affects one of the sections which is very much part of the discussion.

Mr Fletcher: I am Ian Fletcher; I am the Chief Executive of the Intellectual Property Office.

Mr Quilty: I am Edmund Quilty; I am Director of Copyright and Enforcement in the Intellectual Property Office.

Mr Layton: I am Andrew Layton; I am Director of Trade Marks and Designs in the Intellectual Property Office.

Q42 Chairman: Thank you very much. Let me lead off with the first question about the Copyright Tribunal operating under rules which were described in the IOP Report as "pernickety, repetitious, at times otiose and restrictive". Did you write that?

His Honour Judge Fysh: No, I did not; I disagreed with it. We have a judge's report which you may have seen. I was asked by the Chancellor and Lord Justice Jacob and a few other judges to take their opinions and to write not in any way a counter-blast but a report of our own. The rules have evolved over the years. My predecessors and the deputy chairmen have worked on these rules - I worked on the last lot before I actually took over - and they have, like other tribunal rules (for example the Asylum and Immigration Appeals Tribunal with whom I share a court building), evolved specifically to cater for the needs and aspirations of those who are our punters and our clients. It may appear pernickety in some ways in detail; they undergo constant revision; we look at them, the deputy chairman and I, and we tweak them and improve them as we go along. I do not agree that they are so characterised.

Q43 Mr Boswell: Could you just comment on any difficulty in transferring the formal jurisdictional sponsorship of your Tribunal to the Department of Justice? Clearly there is an important input and I think there has been a centralisation of most tribunals. There is no difficulty in that that you see provided the budget transfers with it.

His Honour Judge Fysh: I see no immediate difficulty but historically this Tribunal has always been different. We have always been with the Patent Office for historical reasons and I think frankly that is the way we would like to stay.

Mr Fletcher: I think the history of this is that the Copyright Tribunal was looked at as part of the package of reforms or the package of work that led up to the tribunal reforms in 2003 and it was seen as a tribunal in those days which dealt with a specialist jurisdiction and it dealt with cases, as we were hearing before, where the parties were generally representative bodies with UK-wide coverage and a good level of representation. As Judge Fysh has said, resources were provided by the Patent Office, as then was, and there was a sense that this was not a problem that needed to be fixed.

Mr Quilty: This is not a question with a yes or a no answer; there is no right answer. There will obviously be some reasons you could develop for moving it and there are other reasons why it stays where it is. I do not see there is anyone making such a critically compelling argument for moving it now.

Q44 Chairman: Somebody in your organisation made those comments about it being pernickety, otiose and restrictive; who was it and why? Do they stand by it?

Mr Layton: I think those comments were written by the two inter-parties hearing officers. They are hearing officers in the Trade Marks Tribunal who were commissioned to review the operations of the Copyright Tribunal. I think what they were talking about there were the rules that underpin the Tribunal. The point I would like to make is, as Judge Fysh has said, the rules are subject to incremental change and have been since 1988. They have not prevented the operation of the Tribunal but, as with all legislation, it is a good idea to subject them to regular review to ensure that they remain fit for purpose. I think a number of areas were identified during the review where the rules perhaps were not fit for purpose and could be tidied up. We would support a review of the rules.

Q45 Chairman: Do you think the Copyright Tribunal hearings are in general fair or do they seem biased in side of one favour rather than the other? Judge Fysh, you obviously think it is fair.

His Honour Judge Fysh: Certainly, sir. I noticed that and reject completely the notion that there is bias. I had never heard such a complaint and I did appear before the Tribunal as a barrister. I do not know where it came from.

Q46 Chairman: Where did it come from?

Mr Layton: I do not think anyone is saying that the Tribunal is unfair in our reports. What they are seeking to preserve is the balance of the Tribunal and they came up with a number of recommendations that they thought would help do that.

His Honour Judge Fysh: The origin of this was, because the references are made in the way they are, the referee was always looked upon as the bully, in other words the collecting societies were felt to be the cause of all the trouble and hence we had to redress it. I think that is where it started, but I have never heard of a complaint in action of the Tribunal being unfair.

Q47 Chairman: So you were pretty incandescent when you saw it, were you?

His Honour Judge Fysh: I thought it was wrong.

Mr Fletcher: I think there are two or three separate things here. The Review that was published in 2007 looked at the Tribunal's rules and, as you have heard, that has triggered a debate about what those rules ought to be and Judge Fysh's own contribution is absolutely central to that. Where we have got to is that there is also a wider question about the scope of what the Tribunal does which is quite significant as we look at the relevance in keeping the copyright framework of the UK up to date.

Q48 Chairman: What is the record of the Tribunal? Can you give you give us some quantitative idea of what happens? How many cases have there been since time immemorial and what has happened to them?

Mr Layton: Since 1988 there have been 106 references to the Tribunal. A case might involve, as I understand it, more than one reference, but there have been 106 references. Ninety-five of those references have been dealt with in one way or another and 11 references are still outstanding. Of the 95 dealt with, 44 were withdrawn, 28 were resolved after a hearing, 14 were settled before a hearing, eight were dismissed and one was struck out.

Q49 Chairman: Are there any waiting in limbo?

Mr Layton: There are 11 outstanding cases.

Q50 Chairman: How long have they been outstanding?

Mr Layton: I do not have the detail for that but we can send it to you.

Q51 Chairman: Weeks? Days? Hours?

Mr Layton: I cannot say.

His Honour Judge Fysh: I am adjudicating one that started a year and a half to two years ago; I am writing the judgment for it now. There are a couple that are sitting on my desk that are at the evidence stage and they are moving along, albeit somewhat slowly.

Q52 Chairman: What is it like being Chairman of this Tribunal? It is just a side job really; it takes a lot of time, you do not get paid for it.

His Honour Judge Fysh: I do not get paid for it, no.

Q53 Chairman: Why do you do it then?

His Honour Judge Fysh: Because my life has been in intellectual property and I actually enjoy adjudicating these disputes. I find it intellectually stimulating - those are the usual reasons - and I do most of this work in my spare time.

Q54 Chairman: That seems very rare for the world we live in.

His Honour Judge Fysh: A busy court like my Patents County Court takes most of my time.

Q55 Mr Willis: I have to say I am getting incandescent with frustration here, Judge Fysh. There was a review of the organisation 12 months ago which, in fact, made swingeing criticisms of the organisation and said an awful lot of things had to happen. You basically said to us in evidence that all is absolutely perfect; that is how I sum up what you said. There are cases that have been standing for at least three years without a decision; that seems to be inefficient to put it mildly. Out of 106 cases that Mr Layton said had actually come to the Tribunal only 20 have actually had a decision. There have been 15 directions and there are 71 where either people have withdrawn them out of sheer frustration or indeed there has been nothing happening at all. That is a record which I would not like to be proud of.

His Honour Judge Fysh: With great respect that is simply untrue and wrong. They have not been withdrawn, to take one point, out of sheer frustration; there are complex machinations going on between the users of music and other intellectual property rights and the big organisations, the collecting societies, of which we only see the tip of iceberg. They are complex, on-going discussions involving lots of people and lots of interests. We, in the Tribunal, get given a fait accompli. The references have been withdrawn. An order is made; I get presented with the order drafted by the parties, "Would you kindly put your moniker on the top" and I do. It is not out of sheer frustration. Yes, it takes a long time but you must appreciate, with great respect, that we are seeing here the combination of the British common law legal process coupling, if you like, with this discipline of copyright IP adjudication. I have to abide by the common law system. If I make an order that evidence has to be delivered within six weeks and the parties agree that they cannot in due course possibly meet this and they want six months - which has happened - then that is the way it is. The evidence in my Downloading Case was over three metres high; this is an enormous amount of work. I certainly push them on. We have case management conferences, as we do in the court; I push people on, I try to put limits down. They miss the limits, we come back again.

Q56 Mr Willis: I always hear this from the legal profession, with the greatest of respect; there is always a reason why things cannot move more speedily. Surely that is your job as the Chairman of the Tribunal to make sure they do move quickly. We do not have a case that we had with T-Mobile where 15 parties were involved in a relatively simple case; 20 days of witnesses were brought before the Tribunal. That is alright for big companies like T-Mobile, but for the small person actually coming to the Tribunal it just simply gets squashed aside. I would jump in the Thames.

His Honour Judge Fysh: I agree with you; it can be devastating for a small person. I had a funeral parlour owner who telephoned me recently saying he had been presented with a bill for playing no doubt Rachmaninov or something suitable in his parlour; he could not possibly pay it and what was he to do. I explained to him about how you made a reference and so on. He asked how much that would cost and you can imagine his reaction. I have full sympathy with that, but what can I do? These are huge organisations; it is a quasi-legal proceeding and we cannot say, as some continental judges can, "Okay, I've got the general idea; I'm going to give a decision now". We have to give a rational decision. If you look at my 70 or 80 pages in the Downloading hearing it is hugely complex. We have professors come in; there are people called forensic accountants who are hideously expensive, they give very complex evidence, maybe 30 or 40 pages of evidence with 200 exhibits. What is the next stage? The next stage is the professor of statistics; he comes in to answer that, he is an even bigger one. In no time we have this amazing multiplication of evidence. I cannot stop it. I can look at it and say, "What is the relevance of that?" and I do. Sometimes I say, "I don't want to hear that".

Q57 Mr Willis: Surely one of the key roles that you have as Chairman - indeed that Ian has as Chief Executive - is to actually speak out about that, to say that this is unacceptable and something has to be done about it, and to make some recommendations as to how that process can in fact be simplified because that has been going on for 20 years. Simply saying, "Woe is us, I've got six metres more work" is not the answer, is it? What should we do?

His Honour Judge Fysh: With respect, you want to see the last couple of paragraphs of my last judgment; when I discovered the costs had exceeded £12 million I blew my top.

Q58 Chairman: For one case?

His Honour Judge Fysh: There were a lot of lawyers involved, a lot of forensic accountants, a lot of professors; we even had some lawyers over from Brooklyn. I gave permission for a New York team to address the Tribunal.

Q59 Chairman: With all these hundred-odd cases, what do you think that adds up to?

His Honour Judge Fysh: I do not know; it is awfully difficult to say.

Q60 Chairman: Would the money buy Northern Rock?

His Honour Judge Fysh: I can say this as an ex-lawyer: you often have something like 20 Counsel and lawyers involved from huge firms of solicitors.

Q61 Mr Boswell: What you are essentially saying is that there are no quick fixes to this. If we change the sponsoring department or we change the rules or we provide you with two more administrative assistants or whatever it is, because there is a residue of contested cases - the ones that come before your Tribunal - there will always be this kind of complication however attentive we are. There is no easy way of waving a magic wand and making it easy for everyone.

His Honour Judge Fysh: Yes, and it is because of our common law system. We cannot do without it. We cross-examine, we have rules of evidence, of disclosure and all this kind of thing; it takes time. The disclosure documents, the files, were about two metres high alone.

Q62 Mr Boswell: On cross-examination you make notes.

His Honour Judge Fysh: Yes, days' worth.

Q63 Mr Boswell: Rather like our oral sessions it becomes clearer with all the submissions we have had.

His Honour Judge Fysh: I wish I could agree with you. Sometimes after cross-examination a situation, to me as Chairman at any rate, looks infinitely more complex.

Q64 Mr Cawsey: Can we move on to the subject of lay members on the Tribunal. There have been a lot of comments about that, about whether we should have them and, if we do, where should they come from and on what basis should they be appointed. Currently, how are lay members of the Tribunal appointed?

His Honour Judge Fysh: I currently only have two lay members left; there was a time when there were more. I have a rear-admiral and a colonel from an artillery regiment. They are what I would call good chaps; they are splendid people, they say things like "I don't trust that witness". Otherwise it is all the Chairman.

Q65 Chairman: I am looking at the man next to you, Ian Fletcher, who does get paid for his job.

Mr Fletcher: Not much!

Q66 Chairman: What is your take on the lay members?

Mr Fletcher: The current arrangements for the Tribunal require us to have at least two lay members. As Judge Fysh has said there are two remaining and their appointment at the Tribunal comes to an end in September 2009. The current rules of the Tribunal require us to have lay members so my first question is that if we are going to have lay members how are we going to have ones which are going to make a genuine and valid contribution to the workings of the Tribunal? That in turn leads us to think along the lines of what kind of background and expertise and qualifications might be helpful to Judge Fysh and to the deputy chairman of the Tribunal to discharge the Tribunal's functions in the most expeditious way. That is how our thinking is going. The formal appointing authority is the secretary of state for the lay members just as the Lord Chancellor is the appointing authority for the chairman and the deputy chairman. We will be looking at the question as to whether lay members are likely to continue and, if so, what are we going to do to ensure we have the ones who make the best kind of contribution?

Q67 Mr Cawsey: In the memorandum we received we were told that there was a recommendation in 1988 from the Monopolies and Mergers Commission that lay members should be chosen for expertise that is relevant to the Copyright Tribunal. Are you saying that that is what you intend to do with future appointments or do you think you are doing that with the appointments you have made? Or have they just been ignored and, if so, why?

Mr Fletcher: I cannot comment on the appointments that have been made and I certainly would not want anything that I say to cast any aspersions on the contribution which the existing lay members have made. The 1988 Monopolies Commission Report was made in the context of foreshadowing the establishment of the Tribunal and in the context of looking in particular at the monopoly position of PPL, it talked about the lay members as kind of industry representatives. That is not what I was saying. I think it is really a question that if we are going to have lay members how can they make the best contribution through having a technical background or qualifications which will assist the Tribunal in getting through the case work that it has got.

His Honour Judge Fysh: I had this experience as a barrister both here and in Singapore where I have appeared before their Copyright Tribunal. The most useful lay members are accountants. They are not members of the industry and frankly, as a judge, I would not want members from the industry.

Q68 Chairman: What kind of accountants? Forensic or non-forensic accountants?

His Honour Judge Fysh: Senior partners in big firms who are used to commercial work. Also, for example in Singapore, they had a wonderful lady who was head of the Singapore National Library and she made a very interesting contribution. That is the sort of lay member I would like. My colonel and my admiral are wonderful but as far as I am concerned they are pretty useless.

Q69 Mr Cawsey: What about the future of lay members? Would it be abolition or would it be transparent appointments on the basis of expertise?

His Honour Judge Fysh: The latter in my view.

Mr Fletcher: I think that is where I am coming to as well; I have yet to consult ministers on this. The review that we did last year has opened up a pretty vigorous debate about this. That is probably the answer I will be coming too as well and, in terms of the kind of workload that the Tribunal has at present, that feels about right.

Q70 Mr Boswell: Would it be open to the Tribunal at an early stage - or you, as the Chairman of it - to invite somebody to sit as an assessor or advisor to you or to give expert evidence outside the request of the parties?

His Honour Judge Fysh: That would be tempting but dangerous. I can see all kinds of problems arising, for example appeal points. We do have an appeal to the High Court.

Q71 Mr Boswell: It would be possible to provide an expert input, that is what you are rather anxious to have.

His Honour Judge Fysh: That is right.

Q72 Mr Boswell: I just want to touch on orphan works. I would like to get a handle on how big a problem this actually is in your experience. Who is really suffering from this? Is it really frustrating what is presumably the idea of copyright which is to provide a fair exchange and get material out for use? Given that this is obviously a matter under debate within government, when are we going to know which way it is going to go?

Mr Quilty: On the first question, is it frustrating the use of this, the representations we have had certainly suggest that it is. Putting an economic figure on that could be quite tricky I suspect. Clearly I think our view is that there is a problem there to be addressed.

Q73 Mr Boswell: Where are those broadly coming from?

Mr Quilty: You heard about them in the earlier session.

Q74 Mr Boswell: That is consistent with your experience.

Mr Quilty: Yes. As to the way forward, this is an area where we have to work within the context of the European perspective as well; the EU has an interest in it. There is a lot of activity at the EU level at the moment; there are working groups who are looking into this and looking into how it might apply to different forms of copyright work. I think our general feeling is that we should not jump on that until we know with a bit more clarity which way the EU process is going. My best guess perhaps is later this year, towards the end of the year, we might have some feeling on that and decide which way in the UK context we ought to move.

Q75 Mr Boswell: There is no directive at the moment that directly bears on this, but there might be.

Mr Quilty: There might be action at that level but exactly what that might be it is difficult to say right now. I think in about a year or so it might be a good time to be looking at it.

Mr Fletcher: It is worth saying that copyright is in principle a matter of community competence so we are looking at a community framework. If we did anything nationally we would run the risk of it being overridden by later community law so that is part of the thinking. To add colour to what Mr Quilty has said, we are pretty aware that the French Government - who have the Presidency in the second half of this year - want to make intellectual property one of the things they make a bit of a push on so that may help to get the orphan works question further up the European agenda than might otherwise have been the case.

Q76 Mr Boswell: Is it your impression that there is a wide divergence in practice at the moment within European Member States?

Mr Quilty: I am not sure actually. I am two weeks into the job so I have to be a bit careful. I think that is something that will come out of discussions and we may be able to see what other Member States are doing.

Mr Fletcher: I think there is either divergence or complete absence.

Q77 Chairman: One of the recommendations is the 2007 Review is that licences and tariffs will have to be supported with hard facts and figures and methodologies which are available to licensees. The British Music Rights have argued that its methodology for setting these tariffs is reliant on licensees providing realistic estimates and projections about their new businesses and a high degree of cooperation from them. It goes on to talk about revenue projections and so on. Are the recommendations in this area sound, do you think?

Mr Layton: I think the recommendation in the Review stems from a reasonable view from one of the reviewers that most issues brought before the Tribunal relate to the tariff charge for a licence, that the parties before the Tribunal ought to come with a great deal of evidence to back up their claims or views. It was calling for more use of actuarial evidence, sampling results. Having conducted the Review we put out the recommendations for public consultation, as you are aware, to see what other people thought of them and I think that is one of the recommendations where there is a huge amount of mixed opinion as the value of taking a more structured and disciplined approach. As we have heard, insisting that more evidence is brought to a tribunal might not in all cases be the way to swifter justice in this. It might give rise to more expert opinions from forensic accountants and so on; it might just give the lawyers more things to argue about. I think what this recommendation has resulted in is a very clear understanding that a one size fits all approach does not necessarily work.

Q78 Chairman: You have heard the Judge talking about how difficult it is to make decisions, how expensive it is; what do you think, Judge, about methodologies and evidence based policy rather than policy based evidence?

His Honour Judge Fysh: I think at the moment that the Tribunal and the UK IPO should not really get involved in this part of the business at all; let the protagonists do this and we judge.

Mr Fletcher: There is a kind of issue that lies behind this. One of the things that is a truism that bears repeating is that intellectual property is an economic question carried on by legal and technical means. It is easy to get lost in the legal and technical stuff and forget that what we are talking about is an economic question. In economics, as in so many walks of life, there is often no right answer. The adversarial system gives you a way of getting to some balance but one of the dangers of approaching it from the other angle is that you end up with people thinking that they know what the right answer is. In any market it is very difficult for the expert or the bureaucrat to know what the price ought to be. Often what tribunals are being asked to do is adjudicate on where the balance of pricing ought to lay between two parties of quite different economic size. This is where economics meets law and that is quite difficult.

His Honour Judge Fysh: It helps us in this to look at what are called 'comparables', in other words what men of business have come to agree in a free dealing basis, arms length negotiation. We spend a lot of time looking at agreements between different parties and arguing as to whether it is a true comparable or not, but it does help the Tribunal to get a ball park figure.

Q79 Chairman: In drawing up these licensing schemes you have these two supporters or helpers; when do they get involved and when should they? After the scheme or before the drawing up of the scheme? Where should they come in, do you think?

His Honour Judge Fysh: The scheme is promulgated before I ever get to see it by some of the gentlemen you have seen before us. They devise it; they have a large in-house legal department; they have precedence and some of these proposed licences run to 30 or 40 pages detailing the most amazingly complex deals, for example how far away from a bar you can hear music at 20 decibels normal volume and that kind of thing - and that is a certain tariff. All this is negotiated before we see it. We see it when a party says "no". In other words, we have no part in the drafting of the liscence although if a particular clause is particularly objectionable that comes under focus, I can say, "I think that clause is unreasonable for the following reasons".

Q80 Chairman: How much does it cost to run your section in the whole enterprise? They get you for free, obviously.

His Honour Judge Fysh: Yes, I do not want to overdo it, but I do do all of this for free. My deputy - I only have one left now - is a senior silk at the Patent Bar as is the tradition, or a senior solicitor in a firm that has done intellectual property work. They charge at £316 per day but, as his clerk said to me recently, "I think we may have to have a look at that again".

Q81 Chairman: Do you think it would be better if the Tribunal was in the Ministry of Justice? What is your view on that, Judge Fysh?

His Honour Judge Fysh: I am happy with the UK IPO. Intellectual property is a very specialist part of the law and as I know from my own court, the Patents County Court which was set up to cater for litigants in person, they are absolutely lost in this area of law. I feel very comfortable going along with the UK IPO rather than the Ministry of Justice where tribunals range from the Brown Egg Marketing Board to the one in my own building, the Asylum and Immigration Appeals Tribunal.

Q82 Chairman: So if it is not broken, do not fix it.

His Honour Judge Fysh: Precisely.

Q83 Mr Boswell: Would you be a little more comfortable if you could move along a little more quickly.

His Honour Judge Fysh: Yes.

Q84 Chairman: How can we improve the interaction between the Tribunal and the IPO, do you think? Is there a way of doing that?

His Honour Judge Fysh: We get on pretty well I think at the moment. I have gripes and so on about the staffing and about the furniture; we do not really have a proper courtroom in my view. I went to Canada - I was sent there by the UK IPO, by Mr Fletcher' predecessor - to have a look at what they do. They have a staff of 12 and a proper courtroom. The Chairman of the Canadian Tribunal, like me, is an IP judge and he does it part time (he is paid). We get on very well; there is a symbiosis, we have an understanding.

Q85 Chairman: How about the collecting societies? Could you incorporate them deeper into the organisation in any way?

His Honour Judge Fysh: No. I stay clear of them because I have to adjudicate over them. I am very friendly with them; I meet them on social occasions; one of them shook hands here as he went out.

Q86 Mr Boswell: We have not mentioned the word "fees" this afternoon and as I understand the recommendation in the report is actually to dispense with them. If I understand Judge Fysh, he is saying you have to hit out or get out, there is no point in going half way. If there is a problem with resourcing, if these are very high end cases with a huge legal input - up to £12 million you quoted - is it reasonable to say that the parties should put something towards this?

His Honour Judge Fysh: I would think yes, and I would think the fees should be quite hefty but we would have to look at them carefully because we do not want to deter people. People who have no resources must obviously not be kept out of court. By the same token, some fees are a good idea. I was admitted as an Indian advocate before I became a judge and the fees there remained absurdly low so the whole system gets entirely plugged up with frivolous applications. I have not detected that with the Copyright Tribunal; these are all serious players.

Mr Fletcher: One of the things that has emerged from the debate which has followed the publication of last year's review is the question of the kind of secretariat support for the Tribunal. I am absolutely clear that the amount of resource that the Intellectual Property Office puts into it needs to be beefed up. We are looking now to see if we can measure how much, at what level and so on we need to put in. I want to be really clear that I share Judge Fysh's view.

Q87 Chairman: How long will it take to determine all this?

Mr Fletcher: Probably two to three weeks at least. The work is going on now and that is something we should do and we are going to do. The case for that is absolutely clear.

Q88 Mr Cawsey: The ALCS submission to us spoke about the proliferation of digital technology having upset the balance between rightsholders and users as opportunities to obtain creative works for free have increased. What effect do you see the emergence in growth of digital technology has had on the balance between the rightsholders and users?

Mr Fletcher: It has put it under real, real strain. When I look at the ministerial post bag, when I look at our own rate of enquiries across the entire field of intellectual property, I think it is 98 per cent plus in the area of copyright. There is little dispute even among those who are passionately involved about the patent regime or the trade mark regime even though both of them are immensely valuable to the economy; they do not give rise to the kind of conflict that we often see in the copyright area. The second thing is that it is an area where, as you rightly say, changes in technology have actually combined with changes in user behaviour and expectations, what people think is fair at the kind of level of the teenager as well as the other end of the scale the entry into the wider copyright world of some pretty unsavoury characters. There is very wide spectrum of behaviour and technology providing significant opportunities for people to develop new ways of behaving or new ways of making money. I think the fundamental point that I start from is, as I said before, that intellectual property is an economic question carried on by legal means. It is clearly the Government's policy that creators should be appropriately remunerated and the challenge we face is to ensure that the framework of rules keeps up to date with that as far as we can. The Government's response to unlawful activity is as clear as it can be and, turning to the subject of your inquiry, the means of setting remuneration within that framework is as up to date as we can get it. I think that is the wider picture.

Mr Quilty: The Gowers Review which was referred to earlier on was fairly comprehensive and it made some recommendations which were designed to address the problems of the digital age. We have a programme of work there to do in putting a lot of that stuff in. Obviously that Review and the implementation of it will not be the end of the story because we will be hit by new technology and challenges. The problem for us will be to try and construct a regulatory system which survives each new technology as it comes up. That might be the thing we would really need to look at in the future.

Q89 Mr Cawsey: Professor Lessig, chairman and co-founder of Creative Commons posed the question, does copyright have limits? Historically copyright was relatively tightly drawn but in the past quarter century it seems to have extended exponentially and is set to conquer digital technology. Is the Government aware that these other views are out there? Have you actually considered whether the creative industries might flourish under a less restrictive regime?

Mr Quilty: One answer to that is actually Gowers itself. In certain areas the recommendations of Gowers will actually result in a de-restriction of the copyright regime, particularly if the format shifting exemption is put into place. It is quite right that there are certain ways in which the system could be tightened up but there are also ways in which it can be made more relevant to the age. The main thing is that we have to keep a balance at the end of it and we have to try to make sure that where we get to is that the interests of the users and rightsholders are balanced.

Q90 Mr Cawsey: So you rule nothing in and nothing out; that is what improves the overall system.

Mr Quilty: Yes.

Mr Fletcher: That has to be the right answer. Certainly we participate in debates with people who advocate revolutionary changes as well as evolutionary changes. The Creative Commons people are a good example of that. We have to go back to the starting point that we are looking to ensure that the economic objectives if the IP system are foremost and that includes, I think, the clear understanding that creators and rightsholders need an appropriate level of remuneration for their efforts. Against that broad test there is nothing that ought to be excluded.

His Honour Judge Fysh: Could I just draw your attention to the fact that in this field counterfeiting is on an enormous scale. The people who come to our Tribunal are the goodies, if I may call them that. We had evidence at the Downloading hearing that there are now so many sites whereby one can download all sorts of things but above all recorded music. If we set the tariffs too high people will just go to the sites where you can get the latest songs within half an hour of them being published.

Q91 Mr Boswell: I want to come in on the consultation process following the IPO study. I am sure it would characteristic of this sort of occasion that the representations you receive from the interested parties are almost predictable in advance and you may well know what you are going to have from them. Have you had much interest - I am not asking for the details here - from what might be termed persons who may have an intellectual interest in this area and/or have you got much access to outside academics and experts in helping to formulate the policy? I think this has been an interesting exercise for us because it is something we have not addressed for a long time and I am glad that we have, and clearly you have, I am not suggesting you have not. I am interested in how much the debate is a real one and how much it is a kind of re-run of the parties of the Tribunal in fact.

Mr Fletcher: One of the things which has been very apparent over the last year has been that the Intellectual Property Office and the Government more generally has not had access to the quality of economic analysis that we needed. One of the solutions was contained in one of the recommendations in the Gowers Review which was a recommendation that Government establish something with the accurate but uninspiring name of the Strategic Advisory Board for Intellectual Property as an advisory NDPB and we are in the process of doing that.

Q92 Mr Boswell: Will that have a strong economic input?

Mr Fletcher: And a £500,000 research budget which is a lot of money in research terms; you can buy a lot of academic time for that. We provide the secretariat and the budget but it is to be an independent advisory NDPB. That will go some way from broadly the middle of this year when I expect it to get underway to fill that gap. There is an interesting Australian kind of precedent for that, the Australian Council for Intellectual Property which has played this role which I actually suspect was the Gowers model. Secondly, the Intellectual Property Office itself is in the process of setting up an economics and evaluation unit to do three things. One is to ensure that the normal services that we offer are subject to an appropriate level of evaluation from the point of view of the economic beneficiaries and I think that is an important piece of our accountability. The second thing is to ensure that policy development, particularly in areas like copyright, is appropriately underpinned by economic work to ensure that we can focus on the changes in the economy or the changes in economic behaviour that we would like to get. The third reason is to ensure that we can connect to the rest of the DIUS departmental agenda appropriately. That is something that is really our top priority in terms of organisational change exactly so that we can we can begin to be in the position to have the best possible economic insight to the development.

Q93 Mr Cawsey: Over the last 20 years of so the governments of the day's preferred way of pleasing monopolies has been regulators. Is it the Government's objective that the Copyright Tribunal should become a regulator for copyright and for fees?

Mr Fletcher: I know of no suggestion that it should become a regulator in the sense that you are talking about. I think the role that the Tribunal plays is narrow but I do not mean that pejoratively; it is a carefully circumscribed but important one of adjudicating on licensing arrangements, particularly collective licensing arrangements. The wider question of how the creative industries work does not necessarily to my mind give rise to regulatory questions which are not resolvable through the normal operation of the competition laws and/or the civil courts. I am not sure there is the kind of special position you get in power and gas for example or telecom where you need an independent regulator.

Q94 Mr Cawsey: Would you have an ombudsman then?

Mr Fletcher: I think one uses ombudsmen to deal with issues of unfairness as a kind of backstop, a kind of catcher of the ball of last resort. Our thinking about this is that the Tribunal has tackled cases brought to it by applicants who have been large, well-resourced with big legal guns behind them. I think there is a question - I think Judge Fysh's comments this afternoon have alluded to it - about the extent to which the Tribunal's scope includes ready access for smaller applicants or people who have a particular interest. I think there is scope there, but I would not use the word ombudsman but a smaller claims kind of question.

Q95 Mr Cawsey: Exactly. It has been put to us that recourse to the Tribunal might be avoided in some cases if there were somewhere else to go that was more simple in the first place.

Mr Fletcher: I think there is a real question there that we need to think through. Some of it might be through thinking through how we would handle under the Tribunal kind of ambit smaller claims. The other is the question that was raised by your previous witnesses about mediation where my office has mediation services in the patent area particularly which we are really just experimenting with. We have only had the first few cases and it is not yet clear how far it goes.

Q96 Mr Boswell: Is there going to be a Government policy on orphan works or is it just simply going to wait for Europe?

Mr Quilty: We have to wait for Europe and we then have to evaluate what they have come up with in terms of direction and then figure out what it would mean for us.

Q97 Mr Boswell: Given that you are an arm of Government this is important and an area where I have had interests myself in the past. Can we at least be certain that Government will go to Europe with a fairly clear position as to what you would like rather than appearing that you were the passive recipients? I am fairly anxious that we should be seen to be influencing the debate for good, bearing in mind, as Mr Fletcher has reminded us quite properly, this is a serious economic interest and not some kind of antiquarian or lawyers side show.

Mr Quilty: One point is that the Government is feeding into those European negotiations. Another thing is that DCMS have the lead role. I think so far as we are concerned it is in our interests to have a fairly clear idea of what we want to achieve out of it. If you are involved in European negotiations you have to be a little bit clever about how you phrase your suggestions, you do not want to start with a position that immediately puts you on the sidelines. Yes, we need to know what we want but we also need to know how we handle it properly.

Mr Fletcher: I guess the real point that you are driving at is that we are in consultation with particularly the library sector but also others on the wider question and as Mr Quilty says our approach is an active one, we are not sitting back passively waiting expectantly for the answers.

Q98 Chairman: If we looked at the Copyright Tribunal again in a year what difference would we see do you think?

His Honour Judge Fysh: You will see one change which is to do with a sub-judice case. There is a section called section 128 A and B which is mysterious. It came as a result of the EU Rental Directive. Section 72 was amended to bring in what is called excepted sound recordings, in other words broadcasts performed in commercial premises were formerly excepted but now they are not. There was consultation about that, then when the Act was amended we discovered on the amendment that there was a quite complex series of steps to be taken involving a reference to the Secretary of State and an extraordinary inquisitorial role imposed upon the chairman, almost continental style, such that I was to go around barber shops and shops and garages and so on and find out what people thought about it.

Q99 Chairman: That is our job.

His Honour Judge Fysh: It sounds rather fun, in fact I have just done it for the purpose of my judgment which will not doubt raise howls of irritation. That, I would hope, will change.

Q100 Chairman: Ian, what is your gravestone going to say on it about what you have done about this whole Copyright Tribunal.

Mr Fletcher: Our intention is to look at amending the Tribunal's remit to respond to current copyright challenges, something we have started to talk about this evening. I do not think the Copyright Tribunal is or has ever been failing but I think it has ended up the victim of the cases which have been brought to it which have been big gun cases and as a result of their complications and expense they have given it an unfair perception that it was unwieldy and hard to get access to.

Q101 Chairman: So you will be the man who radicalises the Copyright Tribunal, will you?

Mr Fletcher: I hope at the end of a year or so the Tribunal will be taking on a wider range of cases and I hope that that perception which, as I say, is unfair will have gone away. I hope that will be part of a process that government will have been involved in to ensure that the whole copyright framework is fit for purpose. I think that is the important agenda that we have.

Q102 Mr Willis: Professor Lessig in his very interesting paper to us did a chronology of the history of the Copyright Tribunal and in his last paragraph he said, "Copyright designed to benefit authors, if allowed to become too powerful, becomes the tool of monopolies and again we ask the question does copyright have limits and if it does not have limits who should decide them?" I just wondered what your response to that was.

Mr Fletcher: All intellectual property rights should have boundaries. Patents, designs, trade marks, copyright are all legal monopolies granted in different circumstances and like any monopoly there should be a very clear "bargain" between the state granting the monopoly and the beneficiary. That means those boundaries are really important for the good functioning of the economy. Who should determine the rules? That is Parliament; there is no question about that. This is a legislative question. The role of the Tribunal is to look at individual disputes within an established framework of law and then say on the facts of a particular case where the boundary is. It is important that we recognise that this is a central function of the state.

Q103 Mr Willis: Given the digital age questions we asked earlier, do you feel that Parliament should revisit this?

Mr Fletcher: That is for ministers to look at.

Q104 Mr Willis: What do you think?

Mr Fletcher: I think that the volume of debate and public interest about copyright in the Gowers recommendations that the Government is already taking forward - orphan works is a good example - the sheer volume of correspondence the Government is getting now suggests to my mind that that debate has actually started.

Q105 Chairman: When was the Gowers Report published?

Mr Fletcher: December 2006.

Chairman: Thank you. Can I thank you very, very much indeed for coming along and being lucid and clear and amusing at the same time, and for sharing with us your frustrations but also the work you are putting in behind the scenes. Whether or not we will have a report will depend on our subsequent meeting, but we thank you very, very much for opening up a lot of the avenues for us. A very clear picture has been given in that there are no straight solutions but certainly we have got over some of the problems which we did not when we first came. Thank you very much for your time.

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[1] Note from the witness: Until the passing of the Copyright Designs and Patents Act 1988, unpublished literary works were protected indefinitely. That indefinite protection was ended by the Act, but not until 50 years after it came into force in 1989. Currently therefore an unpublished literary work, such as a letter or a diary or a will, of any date is protected by copyright until 2039 at the earliest. From then on such works are protected for the standard term of the life of the author plus 70 years. The application of the standard term to all unpublished works would hugely reduce the quantity of orphan works at a stroke.