Open Rights Group (ORG) submission
22nd February 2011
Appendix 2: ORG response to Ofcom's BBC DRM consultation.
Appendix 3: Responses to ORG's call for people's experiences of DRM.
Appendix 4: Richard Clayton contribution to ORG's intervention in the Judicial Review of the Digital Economy Act. (PDF)
1. Introduction and recommendations
Open Rights Group (‘ORG’) was founded in 2005 by 1,000 digital activists. We have a core staff backed by an expert Advisory Council and Board of Directors. We now boast 22,000 supporters with over 1,400 paying contributors. We are the UK’s leading voice defending freedom of expression, privacy, innovation, consumer rights and creativity on the internet. We campaign to change public policy whenever citizens' or consumers' rights are threatened.
We welcome the opportunity to contribute to the evidence gathering process of this Independent Review of IP and Growth. Our submission focuses predominantly on digital copyright, and draws from a belief that openness and flexibility in Intellectual Property policy and practice will bring economic, social and cultural gains. Broadly, from our perspective we believe this review represents a chance to do three things:
We feel that policy making around copyright has, up until now, been travelling in the opposite direction. It has rested on a rather unbalanced position regarding what effective role IP can play in innovation and growth. This is evident from the Digital Economy Act, in the moves to extend copyright terms covering sound recordings at a European level, through to the Anti-Counterfeiting Trade Agreement.
These are manifestations of an approach to copyright that has restricted the adjustment of the creative economy to the digital age, with consequent negative effects on creativity, on the creative economy, on the interests of consumers and on social and economic innovation. It prioritises restriction and punishment, is not supported by robust evidence and works against the interests of citizens and consumers. It characterises a market problem as being predominantly a law enforcement problem.
That policy has taken this route is curious. Debates about IP now tend to be mature, nuanced and balanced. That is evident from previous government reviews through to the most recent RSA event in support of this review. In the forward to his 2006 report, Andrew Gowers said:
'The ideal IP system creates incentives for innovation, without unduly limiting access for consumers and follow-on innovators. It must strike the right balance in a rapidly changing world so that innovators can see further by standing on the shoulders of giants.'[i]
In most discussions there is an acknowledgement of the balancing required to reconcile the interests of rights holders, consumers, creators, citizens and innovators - even if the weighting given to the various interests in this calculation varies across stakeholders. But there is a disconnect between the intellectual winds blowing from IP debates and the policy making supposedly based upon it. One of the best legacies of this review would be a demand that policy making reflects the balance and proportionality advocated in so much of the thinking around IP.
A related problem is the confidence with which policy makers cite figures and evidence of the effect of 'file-sharing' on the creative economy. We feel it is important to stress that we believe there has been a mischaracterisation, through a failure to invest in an analysis of independent and rigorous research, of the set of behaviours often pejoratively labelled 'file-sharing'. That has led to an overly zealous approach to enforcement, to a mistaken presumption that such action is the best way to pursue economic innovation through revenue restoration for the relevant industries, and to the marginalisation of citizen and consumer rights.
We believe that continuing to embrace and understand the benefits of nascent markets and business models will be more effective as a means of improving the lot of the creative industries and consumers alike. Providing the content people want in ways they want it is crucial.
Furthermore, we believe that wherever IP is enforced, there needs to be an inbuilt respect for the rights of consumers, creators and researchers that is currently lacking.
We believe this strategy of correcting the IP balance in favour of flexibility will drive greater economic and social innovation. It will be the best way to satisfy the government's vision for growth, set out in its recent strategy:
'The Government’s priority must be to create the conditions for businesses to grow and for individuals to reach their potential'[ii]
The strategy paper goes on to say that 'many of the benefits from innovation come...from spreading the benefits of existing technologies.'[iii] The benefits of existing technologies involve allowing people to find and reuse information and knowledge like never before. That requires more explicit rules that permit and encourage reuse.
Below we expand on these arguments by discussing our position on the benefits of greater flexibility; the importance of recognising the public good dimension to IP and copyright; and the need for a better understanding of the impact of enforcement measures.
On the basis of these, we make a number of recommendations:
◦ Recommendation: Commit to a programme of independent and rigorous research that aims to broaden the basis for policy by examining the broad economic and social impact of digitisation on cultural and knowledge production.
◦ Recommendation: A moratorium on any further policy making, either legislative or self-regulatory schemes, that strengthens the enforcement of copyright online until that programme of research has been conducted.
◦ Recommendation: Ensure that there is a full assessment of the relationship between copyright and competition issues, covering questions of fair and competitive markets from the perspective of innovators and consumers.
◦ Recommendation: Ensure that copyright policy is not undermined or superseded by contracts. Investigate the effect of contracts on relationships governed by copyright, from licensing agreements through to Digital Rights Management and End User Agreements.
◦ Recommendation: Establish clarity about the government's position on copyright term extension. That should, following the evidence, reject extension of copyright term beyond current levels. It is vital that the UK government falls into line with the available evidence and commits publicly to opposing moves to extend copyright term length.
◦ Recommendation: Ensure that independent technology experts are involved from as early a stage as possible in discussions about regulations or enforcement mechanisms reliant on technology.
◦ Recommendation: To commit to implementing wide-ranging copyright exceptions, particularly 'low-hanging fruit' such as parody, with a clear position as to the importance of updating and respecting a range of copyright exceptions to facilitate private uses, accessibility issues, research and educational interests.
◦ Recommendation: With regard to private investment in the digitisation of public records, cost recovery analysis needs to be transparent and exclusivity deals should be time-limited in relation to that analysis, with a clear outline of when that data returns to the public domain.
We have attached at Appendix 1 the Open Rights Group submission to the Gowers Review of Intellectual Property.
Appendix 2 features ORG's response to Ofcom's BBC DRM consultation, which sets out many of the criticisms that DRM systems attract in relation to competition and innovation.
Appendix 3 contains some responses to ORG's call for personal experiences of Digital Rights Management.
Appendix 4 contains an expert report produced by Richard Clayton for the Open Rights Group intervention in the Judicial Review of the Digital Economy Act. The paper sets out in detail the problems of traceability online.
We include these appendices as they contain evidence, from our previous and ongoing work, which we believe supports our call for greater flexibility and less aggressive enforcement.
2. Releasing the currency of the creative economy
Broadly we believe that the assumption implicit in a lot of policy making on copyright – that greater levels of protection and enforcement lead to greater economic and social benefits in all cases – needs to be challenged.
A broad appreciation of the benefits of more flexibility and openness for social and economic innovation is evident in the Government's continued support for open data. Exemplified by its commitment to the Open Government License[iv] for public sector information. Francis Maude, Minister for the Cabinet Office, said recently:
"Public sector information underpins a growing part of the economy. The technology that is around today allows people to use and re-use this information in new and different ways. The role of government is to help maximise the benefits of these developments."[v]
This interest is driven by an acknowledgement of the benefits of allowing more people to use data. Every area of 'content' is different, with differing optimal environments of reuse. But the principle that there are limits to the economic monopoly given through copyright applies across each one equally. The creative economy is driven by the use, reuse and exploitation of information. Our contention is that the evidence demonstrates that copyright needs to create a permissive environment in order to fuel that reuse and exploitation.
In this section we will spend some time going through the figures used to justify the existing policy making approach. We do so in the hope of demonstrating that proceeding in copyright policy requires a programme of quality research aimed at understanding the effects of digitisation on creativity and the creative industries.
We then discuss the need for fair and competitive markets as the ideal response to digitisation, before moving on to a discussion of why it is essential to consider the 'public good' aspect of copyright and IP, covering the need for reinforced copyright exceptions.
The evidence is not well enough understood
Currently policy is not grounded in a strong enough analysis of the impact of digitisation on creativity and the creative economy. Evidence is crucial if the effects of digitisation on the supply of creative copyrightable works is to be understood.
This is an area in which a rethink is essential, with a clear agenda for research laid out that can form the basis of sound future policy. The most urgent need is to ensure that in future policy making there is a commitment to an independent programme of research to ensure that previous mistakes are not repeated. There are a number of weaknesses evident in the way evidence has been used in policy making on the digital economy.
Case study: The Digital Economy Act Impact Assessments
One very clear manifestation of the problems in the relationship between policy making on the digital economy and evidence is the Impact Assessment for the Digital Economy Act. The analysis of the evidence in the can hardly be considered to pass a test of adequacy for such an important piece of legislation.
The Assessment relied on estimates of the revenue harms of piracy and the effects of the Act's provisions on industry well-being. It cites a range of studies on the impact of file-sharing on industry revenues, which place the % of the decline in revenues due to file-sharing in the region of 0% to 20%.[vi]
However, the Assessment proceeds to work through the revenue costs to industry in detail using single studies picked from that range. There is no rationale given for the choices made, even though this is the basis for the oft-cited claim that file-sharing costs industry £400m per year. The study used to measure the costs to the music industry is cited simply as 'Jupiter 2007'. 'Jupiter 2007' is not available to the public. Its methodology is not disclosed or critiqued.
Other studies cited, including Blackburn (2004) and Zentner (2006), that establish less dramatic conclusions about the effect of file-sharing (0% and 8% of decline in revenues respectively) are ignored, for unexplained reasons. It is not clear why the chosen studies were privileged. None of the methodologies, and the benefits or limitations of them, are discussed or reviewed. Similarly, it is not clear why broader analyses of the effects of digitisation on society were not considered.
Furthermore, when considering the benefits of the provisions of the Act, the Assessment makes extremely broad claims about the behavioural consequences that will follow its implementation.
It cannot be acceptable that the Impact Assessment for an Act of Parliament relies on a study that is not publicly available, or that the figures relied upon are sourced from an industry that (believes it) stands to benefit so directly from the Act's provisions.
The evidence considered in policy making for the digital economy is too narrowly focused. First, policy makers have tended to privilege too narrow a range of sources. This was evident in the Digital Economy Act, as discussed above. And it is evident in the political discourse around file-sharing; in February 2011, Jeremy Hunt said that 'the Digital Economy Act seeks to protect our creative economy from online copyright infringement, which industry estimates costs them £400m a year.'[vii] These numbers have become common currency in the debate.
Other studies such as those by Felix Oberholzer-Gee and Koleman Strumpf (the most recent from January 2010)[viii], suggest that the impact of file-sharing has been more muted and less destructive than is often suggested. As the Impact Assessment for the Digital Economy Act itself points out, a range of studies are available that provide highly competing assessments. We would also point the review team to the reports prepared by Professor Robin Mansell and Professor W. Edward Steinmueller in support of BT and TalkTalk's submissions for the Judicial Review of the Digital Economy Act.
Relatedly, analyses of evidence rarely includes the wider 'welfare' benefits of digitisation to consumers and citizens. In 2010 SABIP produced a report which argued that this has not received enough attention partly because the data available tends to relate to industry revenue.[ix] The report suggests that '...in order to inform copyright policy, it is not sufficient to establish that so-called ‘piracy’ harms existent rights holders'.[x] Further, little attempt has been made to establish the different types of infringing behaviour – personal, creative, commercial, non-commercial – and the relative effects of them. All sorts of counterfeiting, sharing and minor infringements are often conflated.
Similarly, the United States Government Accountability Office stresses how difficult it has been to establish credible figures on the impact of 'counterfeit and pirated goods', due to the huge variances in methodologies and assumptions taken by different studies.[xi]
These are contested figures, and the studies above are meant to demonstrate that the breadth of academic opinion on the issue of file-sharing's impact is not reflected in policy making. Huge economic and behavioural assumptions are used to justify the figures usually cited.
This is a problem raised by Loren Yager, Director, International Affairs and Trade, Government Accountability Office (GAO), in his report to the World Intellectual Property Organisation Advisory Council on Enforcement in December 2010, in which he highlights the lack of data as the 'primary challenge for quantifying economic impacts of counterfeiting and piracy', alongside a subsequent reliance on assumptions.[xii]
It is possible to say that too often policy makers rely on insufficiently critiqued evidence about the harm that file-sharing causes to the content industries. Too often there is insufficient rigour in establishing what effects digitisation has. And too often industry revenues are taken as the metric used to assess the impact of digitisation on society.
Establishing a duty to the evidence
These mistakes should not be repeated. Such figures provide the moral and economic fuel for demands for action on copyright. There is little chance of taking reasonable steps to legislate for the digital economy without a proper understanding of the nature and effects of digitisation.
Without a detailed understanding or estimation of the impact of different sorts of sharing and copying and distribution online - establishing with some level of granularity what behaviours have what kind of consequences - we are left with figures that cannot adequately form the basis of regulation. That only serves to stretch the phrase 'damaging file-sharing' to conceptual breaking point.
We recommend a commitment to a broader and deeper understanding of the social and economic impact of digitisation. Being clear about why certain assumptions are made, why certain evidence is chosen, and a renewed commitment to independent, robust analysis are all vital.
Case study: The 'Amen break', openness, creativity and innovation
In 1969 the drummer from the popular soul group The Winstons played a six second drum solo in the middle of their song 'Amen, Brother'. The track eventually featured as the B-side to the band's most famous single, ‘Color Him Father’. It was The Winstons' biggest hit, reaching number 7 on the US Billboard Hot 100 chart. A Grammy award followed in 1970. But that six seconds of solo drumming – the 'break' - hidden in the centre of 'Amen, Brother' was to have a far greater cultural and economic significance.
The emergence of sampling technology in the mid-1980s saw many songs harvested for drum solos. Music makers were able to cut and splice and loop these 'breaks', using them as the basis for new works. It was through this form of reuse that the break taken from 'Amen, Brother' began to find new life. And over the next decades this 'Amen Break' would play a foundational role in the developing genres of hip-hop, breakbeat, jungle, drum and bass and electronica.
Nobody asked permission, no permission was granted, and no copyright royalties were paid. Genres based to a large degree on the remixing of the 'Amen, Break' sample spawned countless hits, many musical movements and significant critical acclaim. The sampling and reuse of existing works can lead to new markets opening and significant social value from the experimentation and creativity it engenders.
Case study: copyright term extension in music
The evidence on the impact of extending the copyright term covering sound recording suggests the best course of action is to not extend terms. Policy should ideally proceed on the basis of that evidence. So proposals to extend copyright terms covering sound recordings should be rejected.
The Adelphi Charter sets out the principle that 'there must be an automatic presumption against creating new areas of intellectual property protection, extending existing privileges or extending the duration of rights', and that the 'burden of proof in such cases must lie on the advocates of change'[xiii].
Reflecting the Charter's principles, and having looked at the evidence, the Gowers Review of Intellectual Property argued in recommendation 4 that 'policy makers should adopt the principle that the term and scope of protection for IP rights should not be altered retrospectively.' The Gowers review also concluded that 'economic evidence indicates that the length of protection for copyright works already far exceeds the incentives required to invest in new works'.[xiv] This was subsequently ignored when the UK government decided to support term extension for sound recordings.
The evidence continues to support the position that terms should not be extended. In evidence commissioned as part of the Gowers process, a team at the University of Cambridge found a weak economic case in favour of extending term, which would provide at best a gain of 2% in industry revenues. But they found a strong economic case against it; extending term would result in increased costs imposed on the wider economy and society. Based on a putative extension of 20 years, they calculated a net loss to the UK economy of £155 million per year, with a total cost to music consumers of £240-£480m, as well as a significant negative effect on the UK balance of trade.[xv]
Further, in the paper 'The Value of the Public Domain', the authors found that “highly significant price differences between public domain and in-copyright recordings of similar ages. In our results in-copyright recordings are, on average, between 4-14% (depending on comparison sets) more expensive than public domain recordings – corresponding to a price increase of 23-87p relative to the public domain price of approximately £6).”[xvi] This finding is contrasted with the findings of the relevant impact assessment used by the European Commission which found, on the basis of a much smaller study, no price difference.
Term extension in the form approved by the European Parliament (to 70 years) is still on the table of the Council. The UK government should fall in line with evidence and publicly oppose moves to extend copyright terms beyond current levels.
The opportunities for new business models
The numbers of file-sharers in the UK is another statistic that is hard to nail down. Often cited is a government claim that there are 7 million file-sharers in the UK[xvii]. A Demos survey, carried out by Ipsos Media CT, from 2009 found that 9% of adults in its sample admitted to downloading music without the permission of the copyright holder.[xviii]
It is undeniable that digitisation has fundamentally affected business models of the industries dealing in knowledge goods. The Impact Assessment for the Digital Economy Act suggests that many factors lie behind this. Many argue that 'unbundling' has seen a shift away from album purchasing to singles, with correlative lower revenue.[xix]
The BPI's figures for 2010 suggest a buoyant music purchasing market, with consistent increases in single sales over the past four years, and an overall rise in the units of music sold year on year.[xx] Similarly, the Office of National Statistics recently noted the huge rise in the number of singles since 2007:
'Overall, the volume of sales of singles has grown. In 2007 consumers purchased a total 87 million physical and digital singles: this increased by 76 per cent to reach 153 million in 2009.'[xxi]
At the same time there have been healthy signs of innovation in creative markets. Bandcamp is a great example of a website that has created a successful platform for artists to put up their music for download at any price they choose. As of Thursday March 2nd 2011, the front page proclaims that the site has helped artists earn $511,782 over the previous 30 days. The site has attracted releases from mainstream popular acts including Sufjan Stevens. The site claims that through Bandcamp albums outsell singles by '5 to 1' – a reversal of the trend elsewhere.[xxii]
The new market environment
Ipsos MORI found in an international survey in May 2009 that '94% of people who used them (unofficial sites) for accessing music also used official sites (such as the Apple iTunes Store or Napster) compared to 68% of the population as a whole.'[xxiii] Similarly, the Demos survey cited earlier also found that those in its sample who admitted to illegally downloading music were likely to spend more money on music than those who did not.[xxiv]
This is not to say that these studies prove that file-sharing necessarily spurs or drives sales. But it does begin to suggest that the people who download content without the permission of the copyright holder are not simply freeloaders. They are likely to be a ripe market. Furthermore, a Pew Internet survey in December 2010 in the US found that 65% of internet users had paid to download some kind of content, with music and software the most common purchased content. They found that most purchasers spend about $10 per month.[xxv]
Fair, competitive markets
The point is simply that the content industries are not dying, but changing. We believe that the best remedy for content industries to this changing environment is the development of fair, competitive content markets, driven by innovation in provision through simpler licensing mechanisms. Digital content should be seen primarily as a market opportunity for content industries, not a problem of law enforcement. Taking a similar position, and looking at an international context, Joe Karaganis, in his contribution to the World Intellectual Property Organisation Advisory Council on Enforcement Sixth Session in December 2010, argued that:
“Media piracy has been called “a global scourge,” “an international plague,” and “nirvana for criminals,” but it is probably better described as a global pricing problem.”[xxvi]
Whilst there have been improvements in the past couple of years and work has been done to make more content available online, it cannot be said that the content industries have moved quickly enough to facilitate fair and competitive markets. Much credit must be given to moves to rectify that situation. But still there are restrictions that have the result of causing anti-competitiveness and consumer harms. These include licensing problems through to the restrictions that emerge through 'technical prevention measures' and DRM.
ORG supports innovation and fair competition in the media sector. It is vital that the Government identifies and neutralises any (anti-) competitive forces that are preventing new products and services from coming to the market. New services will not gain wide consumer acceptance until there is a presumption of support for new services along with licensing models that support them.
Case study: Muxtape
In 2008 Justin Ouelette launched a website called Muxtape. It allowed people to upload tracks to a personal Muxtape page for others to listen to.[xxvii] It had a cassette tape visual theme, becoming extremely popular almost immediately. In an interview with Wired magazine, Oulette claimed that the number of Muxtape users was 'more than the population of Germany, less than the population of Japan.'[xxviii]
When asked about the initial response of the music industry, he said 'labels big and small have told me that they’re excited about Muxtape as a model for discovery and ultimately selling music, and I think that’s extremely keen'.
Instead of taking advantage of the sites' nascent popularity, the Recording Industry Association of America took a different public position. They argued that 'Muxtape was hosting copies of copyrighted sound recordings without authorization from the copyright owners. Making these recordings available for streaming playback also requires authorization from the copyright owners. Muxtape has not obtained authorization from our member companies to host or stream copies of their sound recordings'.[xxix]
Muxtape shut down, citing a 'problem with the RIAA'[xxx]. It reappeared sometime later as a forum for bands to upload their own music. It is currently inactive. There are alternative sites, but the momentum behind Muxtape and its phenomenal early success and popularity was lost.
The Muxtape story is echoed across a number of other start-ups, detailed in ORG's response to the Department for Business, Skills and Industry's 'consultation on legislative options to address illicit peer-to-peer file-sharing'[xxxi]. The response cites Datz, MP3.com, Pandora, and the Virgin / Playlouder as further examples of the possible innovative services that have stalled due to the difficulty of establishing licensing.
Our concern is that problems relating to the workings of the content industries, from its licensing agreements to the relationships between major and independent stakeholders, are instead cast as problems of copyright enforcement. Governments cannot determine the worth of copyright, but companies can. Music and film lobbyists are focused on controlling markets rather than innovation. Giving them new legislation like the DEA (2010), ACTA (2010) and term extension (2009) encourages them to think government will fix their problems, and discourages them from focusing on their customers. This works to the detriment of the Government's aims stated in their growth strategy, as they seek:
'a dynamic business environment, driven by open and competitive markets. Incumbent firms need to be constantly challenged to improve and new ideas must be allowed to enter markets.'[xxxii]
To ensure that creative markets are fair and competitive, a number of steps are required. Work needs to be done to ensure that moves to simplify licensing proceed as speedily as possible and to investigate the relationship between contracts, copyright and competition. As noted by ORG in its response to BIS' consultation on peer-to-peer file-sharing:
“The industry repeatedly blocks deals and attempts to ‘pick winners’.‘Picking winners’ is likely to damage consumer benefits and competition. Key services have not emerged. Online jobs are therefore being lost.”[xxxiii]
Case study: DRM, BBC and Ultraviolet[xxxiv]
It is not an exaggeration to say that every disruptive innovation in entertainment technology has been resisted by incumbents. The first cable TV systems were decried as piracy by broadcasters. The humble television remote was the subject of much acrimony when it first appeared. More recently, manufacturers of digital video recorders have found themselves subject to litigation by entertainment companies and broadcasters.
Nevertheless, each of these disruptive innovations found its way into the market, and was accommodated by changes in copyright law. The process whereby these innovations went from "pirate" to legit is grounded in the absence of prior restraint.
Innovators have historically been free to enter the marketplace without permission from incumbent broadcasters, rightsholders or manufacturers. Where their products found a receptive market, they were able to use those profits and the public perception of the value of their products to defend their legitimacy in the courts and in the court of public opinion.
It is impossible to know, a priori, whether a given new technology will find itself welcomed by lawmakers and the courts after proving its worth in the marketplace, or whether they will ban it, but once those who stand to lose by a new technology are given the power to block it without resorting to courts or lobbying, it's a sure bet that innovation will suffer.
DRM regimes eliminate the breathing room that makes unforeseen innovation possible by tying content into the contractual relationships between providers and distributors of content in ways that supersede copyright regulations. Because any innovator who does not have a licence to the descrambling keys is unambiguously in violation of the laws protecting DRM, her product cannot be brought to market, even if it would otherwise be lawful, unless it receives the assent of the change-averse incumbents. The market effects of, for example, the BBC's HD DRM proposals described in ORG's response to Ofcom's consultation can be summarised as:
For example, if a DRM system prohibits user-modifiable DTV devices, a substantial new cost might arise for some vendors - such as those who integrate and sell MythTV systems - who participate in the DTV market.
There are also significant harms for consumers from DRM. There is no adequate mechanism whereby consumer rights can be enshrined in a DRM scheme. This is because consumer rights in technology are a moving target, always in flux in response to new flexibilities offered by technological advances.
As part of the evidence gathering for this submission ORG asked supporters for stories of individual harms caused by DRM, in an attempt to try to capture some of the low-level but significant damage such systems can cause. The responses are set out in Appendix 3. They clearly help demonstrate the individual harms that DRM protection can impose on consumers, harms which directly infringe on their rights as consumers, unnecessarily constrain their use of goods they have bought and reduce the choices they face. One respondent said that 'I've probably spent over £2,000 on DRM related hardware, software, and media, and it has probably cost me about £300 on dysfunctional DRM faults.'[xxxv] Similarly, another said:
“Although I haven't been personally bitten much by DRM (mainly because I know what to look for before I purchase), I have had my choice restricted greatly. For example, many DVDs now come with "digital copies" of the movie, these copies are always DRM'd video files that will only work on Windows, and if you are lucky, on Mac. For users of other operating systems (and there are plenty out there) there is no legal way for us to get a digital copy of our film to store on our PC.”[xxxvi]
And there is little evidence that DRM has restricted the supply of non-DRM goods.
A more recent example of DRM-style protection comes from a service called Ultraviolet. This has been championed as an innovative new way for consumers to stream content on any device they buy, mobile or otherwise, subject to that device being 'Ultraviolet' compatible.
However, our concerns are that Ultraviolet simply expands the number of stakeholders complicit in the same DRM problems. Fundamentally the power to decide when and how content is used remains out of the individuals hands, dependent as it is on the relationships constituting Ultraviolet's coalition of partners. It is hard to see how the user agreement that Ultraviolet requires will not place additional constraints on users over and above copyright legislation, such as the decision that users can share content on 6 devices. And to what extent will the delivery mechanisms Ultraviolet permit users to edit, grab and remix that content?[xxxvii]
It is highly unusual that wholesale providers of any product are able to influence the business model, the price, or indeed the ownership of retailers, yet that seems to be the norm in digital media. Imagine dairy farmers determining the terms on which supermarkets sold milk. Where this happens through measures such as Digital Rights Management, attention needs to be paid to the impact on consumers.
ORG asks the Government to ensure therefore that markets are fair and open, and suggests that a healthy wholesale market with non-discriminatory copyright licensing will ensure a competitive and thriving media sector. We suggest, moreover, that apparent attempts to reduce consumer choice, through 'picking winners' and trying to force preferred technologies onto consumers could well be a symptom of overreach by copyright owners.
Consumer Focus, in its provocation paper 'Copyright, competition and collective rights management: A consultation on the growth of innovation in the creative and digital technology industries', suggests the enforcement of EU case law in relation to copyright owners and collecting societies, with regard to possible abuses of their dominant position. Overall Consumer Focus argues that there is a need for UK competition authorities to use the 'new product' and 'innovation balance' test and issue guidance on 'the interplay between competition law and intellectual property rights to UK companies'[xxxviii]. We suggest an investigation drawing on these principles and precedents into the competitiveness and fairness of creative markets.
Markets need to be fair and open, with a healthy wholesale market and non-discriminatory copyright licensing. This will be a far more effective way of helping content industries adjust to and capitalise on the opportunities of the digital age than overly aggressive protection and enforcement.
IP and the public good
At the same time we believe that digital goods in the creative economy have competing roles as both economic and cultural or knowledge 'goods', facilitating democratic conversations, economic innovation, and scientific collaboration.
There needs to be a renewed commitment to copyright exceptions that permits the fair use and reuse of culture and knowledge. These bring not only softer, social benefits such as rights that create a greater environment for democratic expression. They bring economic benefits when follow-on innovators are encouraged, educational and research benefits where researchers' ability to analyse content in new ways is permitted, and social benefits where people with accessibility issues are allowed to transform works to make them, for example, more easy to read.
Copyright exceptions establish the rights of creators, commentators, satirists, amateurs, citizens and entrepreneurs to innovate. There is a need for a renewed commitment to copyright exceptions that permit fair dealing of copyrighted works. In a media saturated world the images, sounds and text shared in digital form are the currency of our conversations about the world. So it is imperative that the rules for the use of that currency favour citizens and facilitate innovation. Some of these exceptions can be seen as the right to freedom of expression and access to knowledge manifested as checks against the economic right to restrict that access.
For example, in the context of private investment in the digitisation of public records, unending exclusivity deals over the use of those records need to be avoided[xxxix]. Cost recovery analysis needs to be transparent in such situations and exclusivity deals should be time-limited in relation to that analysis, with a clear outline of when that data returns to the public domain.
There is evidence that the rights and exceptions are not currently well enough respected. In Russia, for example, violations of Microsoft copyright have been used as reasons to confiscate the equipment of campaign groups with dissenting voices.[xl] In August last year film-maker Morgan-Jane Delaney saw her Jay-Z parody video "Ymerodraeth State Of Mind" taken down from YouTube.[xli] Lawrence Lessig, in his book Remix, recounts the tale of Stephanie Lenz, a mother whose 29 second video recording of her baby dancing to a Prince song was the subject of takedown notice and removed from YouTube[xlii]. It is likely that there are many similar examples, most of which are never contested due to imbalances in legal resources and understanding – a recipe for the suppression of large amounts of harmless but creative or meaningful material. In another US example, in December 2009, Capitol Records issued a complaint against Vimeo following the popularity of 'lip-dub' videos, in which users lip-synched along to popular songs.[xliii]
While each of these cases involves legal questions about legitimacy under strict interpretations of the relevant law, these are all arguably cases in which the principle of copyright monopoly became more important than the consequences, value or potential value of the behaviour in question.
The exceptions that embed these rights into copyright works are currently outdated, and are not granted enough weight by copyright policy. There is some restriction on the room to manoeuvre with copyright exceptions in the UK, due to the 'list based' approach taken in the EU 'Infosoc' Directive.
There should be a commitment to pushing the existing possibilities for exceptions under the directive as far as possible, with a longer term aim of devising technology and platform neutral exceptions. There needs to be a renewed commitment to pursue exceptions that facilitate parody, research and education, including the computational analysis of material for the ends of research, and which allow the reuse of material in the pursuit of accessibility for visually impaired people, that allow 'format-shifting', and which, with an eye on the longer term, allow transformative works. There must also be a resolution to the problem of 'orphan works', with a drive to unlock that content as quickly as possible.
Many of these ideas were recommendations made by Andrew Gowers, but which have been ignored by subsequent policy making.[xliv] Individually they may be small concessions but they add up to a significant and important step in redressing the IP balance in the digital age.
Specifically, we would particularly like to see exceptions for:
Copyright is a monopoly granted to encourage and reward creativity and to ensure, ultimately, that there is more cultural and knowledge based output. In being so, it is traded off directly against public access and use of those goods. Digital technologies bring incredible new ways to use this content, from sharing ideas, commenting, new ways to listen and see, through to complex research possibilities.
The gains of allowing researchers to analyse data and information in new ways are obvious. The sanity of embedding the legality of format-shifting is likewise clear. We also believe that there is a clear benefit to facilitating the everyday creativity embodied by parody and creative reworking of content such as the cases highlighted above.
There is no evidence that consumer copyright exceptions would damage the revenue interests of rights holders. Consumer Focus commissioned a study on the economic impact of copyright exceptions. It found that 'the economic evidence that format-shifting, parody and user-generated content cause any kind of economic damage to rights-holders simply does not exist.'[xlv]
Any ambitious vision for a creative economy and society must include expanded copyright exceptions. The evidence that restricting these opportunities outweighs the benefits must be compelling. Copyright exceptions need to be modernised to reflect the importance of legitimate reuse.
3. Collateral damage of aggressive enforcement
The benefits associated with the Internet are dependent on its permissive, open nature that facilitates many to many sharing of information. The principles that power this, of openness and individual power, need to be upheld. They are intimately bound up with IP policy where regulation determines that the protection of IP requires the disruption of such rights. It represents a poverty of imagination to respond to network technologies by simply regulating to support and reinforce the status quo, especially where the evidence supporting the benefits of such intervention is not established.
Enforcement is an economic issue to the extent that there is a presumed level of return from enforcement measures; or where there are identifiable economic harms from enforcement. It is a moral issue where the presumed economic gains of greater enforcement are used to justify measures that clearly affect vital human rights, civil liberties and consumer rights. Sometimes enforcement can disproportionately infringe the expressive rights set out above, and interrupt innovators' ability to create new services and products. But there are other harms of aggressive enforcement that, whilst possibly lying at the edges of this reviews remit, we would like to highlight. That is because sometimes these may be justified by economic arguments, in which case it is important that subsequent enforcement respects due process and rights to privacy. And further, enforcement can have unintended consequences by discouraging the provision of network infrastructure or misunderstanding the way technology works. We feel it is important to set these out.
There is a need to make sure that enforcement is focused on the right people and activities, involves proportionate measures, does not infringe citizens' and consumers' rights disproportionately, and does not undermine the infrastructure of the maturing networked world[xlvi]. We have mentioned some of the problems of technical protection measures, 'DRM' and restrictive licensing. In this section we will mention briefly the affects of enforcement on the provision of network infrastructure, the need for technology expertise in any formulation of policy involving regulation of IP that involves technical interventions, and the legal imbalances and disproportionate harms of aggressive enforcement on individuals.
What works? The need for technology experts
Many of the suggested measures to deal with the distribution of content online, especially with regard to enforcement measures, involve questions of how technology works. These ideas involve complex technology issues. Whether they will actually work depends on the technology matching the aspirations.
Appendix 4 contains Richard Clayton's contribution to ORG's Digital Economy Act Judicial Review submission. In it he details the problems associated with traceability online, and the likelihood of and ease with which people can and might try to avoid traceability in the future. In particular through its discussion of the challenges of IP address evidence, the report demonstrates the gap between acute technology expertise and policy making. IP address evidence in the Digital Economy Act is relied upon as evidence of infringement that would trigger the Act's letter-writing and, potentially, subsequent technical measures. More recently, Jeremy Hunt has asked Ofcom to investigate whether 'web blocking' is practical. This kind of intervention should be sought well before steps to implement such measures are undertaken.
It is essential that the relevant independent expertise is included from as early a stage as possible when interventions are being discussed. This is an important stakeholder voice that is currently not being given enough attention. Not doing so has led to a number of measures that will, we believe, likely have significant economic and other harms.
The harms of aggressive enforcement
ORG accepts that copyright owners have the right to enforce their intellectual property rights. But the enforcement process can be misused. A particularly unpleasant example of this in recent years has been several large-scale “speculative billing” campaigns. In many cases these have been prosecuted by solicitors' firms enjoying a share of the profits or by companies set up for the purpose, rather than copyright owners.
The motivation for the campaign appears to be the generation of profit for lawyers and letter writers, rather than the genuine suppression of infringement or the recovery of actual damages suffered by copyright owners. ACS:Law, for example, retained 65% of the takings from their letter writing action.
Typically these law firms have written to individuals whose details they have obtained through Norwich Pharmacal Orders, indicating that their accounts have been used for copyright infringement. The letters tend to request that the individual pay an amount of money (typically in the hundreds of pounds) or face legal proceedings.
The letters directly claimed that the individual was responsible for their Internet connection, and that whether they themselves had carried out the infringement was not a necessary condition of their liability:
“Our client holds you responsible as the person who made the Work available to others, or by authorising others known to you to use your internet connection for a purpose that included infringement of our client's copyright, or by failing adequately or at all to secure and control the use of your internet connection to a reasonable standard so as to allow another person to use your internet connection to infringe our client's copyright. Whichever of these scenarios may apply, our client holds you directly responsible.”[xlvii]
In 2008 The Times reported that law firm Davenport Lyons were targeting 25,000 individuals in the UK who they alleged had been infringing their clients copyright.[xlviii] They stopped doing so in May 2009 following significant negative publicity, including complaints from Which? and a BBC Watchdog special. The Which? complaint ultimately led to an ongoing investigation by the Solicitors Regulation Authority.[xlix]
Since then other law firms such as ACS:Law and Tilly Bailey & Irvine have pursued alleged file-sharers using similar techniques. Andrew Crossley, founder of ACS:Law, is now also subject to investigation from the Solicitors Regulation Authority.
The scale of this action was noted with particular reference to ACS:Law by HHJ Birss Q.C. of the Patents County Court, in his ruling on February 8th 2011in Media CAT v Adams & others  EWPCC 6 at :
“Tens of thousands of names and addresses have been produced to Media CAT as a result of the 3 or 4 relevant Norwich Pharmacal orders, the earliest of which was in November 2009. There have been other similar Norwich Pharmacal orders in recent years, before November 2009, which although not sought by Media CAT have been based on the same general approach.”[l]
Judge Birss was dealing with the 27 cases brought to court by ACS:Law in late 2010. In his ruling he was highly critical of the civil actions before him. He emphasised that they have led to significant distress and financial harm, often to innocent people:
“This court's office has had telephone calls from people in tears having received correspondence from ACS:Law on behalf of Media CAT. Clearly a recipient of a letter like this needs to take urgent and specialist legal advice. Obviously many people do not and find it very difficult to do so.”[li]
Through these cases many innocent people have faced confusing and intimidating letters and have been coerced into paying large sums of money. The damages associated with these claims have little or no relationship to the actual harm accruing from the alleged acts of infringement. We have seen no robust analysis of the specific damages accruing from the file-sharing of one file.
We are concerned that the Act makes such letter writing campaigns and the subsequent harms associated with them more likely. The Act explicitly acknowledges the ability of copyright owners to apply to the court to establish the identity of the subscribers who have been subject to copyright infringement reports (Section 124A(8))[lii].
The requirements for record keeping imposed on ISPs will streamline the process of acquiring large lists of alleged infringers. As we have seen, they may have nothing to do with infringement. Indeed, the Department for Culture, Media and Sport admits that ''the measures in the Digital Economy Act do not aim to attribute liability for online copyright infringement. They aim to reduce and prevent such infringement.”[liii] However all of the individuals on those lists will be vulnerable to the same damaging consequences associated with the recent history of ACS:Law.
We are further concerned about the extent to which IP evidence forms the basis of the provisions of the Digital Economy Act. More worryingly, we are concerned about this evidence leading to any subsequent technical measures taken against relevant subscribers.
Our concern is that the progression of sanctions against alleged infringers proceeds on the basis of flawed evidence and without the appropriate oversight. That could see, ultimately, account suspension on the basis of a small number of reports that are based on what Richard Clayton identifies as problematic evidence. We believe that this makes it likely that innocent people will be liable for the infringement of others.
We are also concerned that the unreliability of the IP address evidence will mean that large numbers of people will be forced to go through time consuming and costly appeals.
In September 2010 there were two significant data breaches affecting ACS:Law. Combined they revealed the details of over 13,000 individuals to whom they had written, including around 5,000 suspected of downloading adult films, covering a range of sexual preferences.[liv] Also included in the leaked information were around 1,000 emails between alleged infringers of copyright and ACS:Law, and also credit card details of those who had settled with the law firm.[lv]
Our concern is that through enforcement such as the Digital Economy Act, large lists of very sensitive information will be compiled, stored and disclosed to third parties, at a time when there are serious concerns about the efficacy of data protection oversight and enforcement.[lvi] This is especially fraught given that information about sexuality is supposed to be afforded extra protection under the Data Protection regime.
Concerns about privacy can sometimes be mischaracterised as somewhat intangible fears about snooping and liberty. However, we believe that the breach detailed above is one example of the substantive concerns many people share about the extent to which highly sensitive information about them can be compiled, stored and simply handed to a number of third parties with minimal effort and oversight.
Harming the provision of network infrastructure
We believe that heaping liability for alleged wrongdoing committed through an internet account to the organisations providing publicly available wifi will dent the willingness of a variety of organisations and businesses to provide easy internet access to the public. Such concerns have been set out extensively by libraries, schools, and hospitality organisations in their statements about the Digital Economy Act[lvii]. All are concerned about their status as either ISPs, or as subscribers, and the liability they will incur whichever category they may fall into.
For example, JD Wetherspoon offer 767 free Wi-Fi hotspots around the country. They have said that 'it would be impossible to police what people are searching on their computer. We don’t have the manpower, nor would we want to go up to someone’s computer and peek over it.'[lviii] Similarly, a joint submission from the British Hospitality Association, British Beer and Pub Association, and British Holiday and Home Parks Association to the Ofcom consultation on the draft Initial Obligations Code outlines their serious concerns about their members being defined either as subscribers, or communications providers, concluding that:
“If the Act is eventually implemented in full, many of our members are likely to withdraw internet/wi-fi facilities, a retrograde step given the technological age in which we live, work and socialise.”[lix]
Likewise, libraries and schools have expressed similar concerns in their consultation; of costly and overly burdensome requirements to control access to their connections.
This is worrying on a number of levels if it leads to a withdrawal of these services. Internet use outside the home has become an important piece of the supporting infrastructure of the networked world. According to Ofcom's Communications Market Report 2010, 72% of respondents accessed the Internet at home. However, a range of other often public places are cited as being used for accessing the Internet by significant numbers of people. 'Work' is mentioned by 25% of respondents, 10% mention somebody else's house, 11% at a library or educational institution, and 2% at a cafe, shop or kiosk. They also suggest that 6% of people in the UK 'only ever access the Internet outside of the home'.
In addition, over a third of all mobile Internet access is 'on the go'.[lx] The figures are not broken down in the report. However, given many handsets now offer wifi connectivity, it is likely that some of this occurs at WiFi hotspots in cafes and other public places.
Aggressive enforcement that leaves liability for wrongdoing through an internet account on organisations and institutions providing publicly available access will leave many of those institutions considering whether to withdraw that provision. This will have economic consequences by disrupting the development of Internet access in public places, shrinking the number of places that the transactions and interactions facilitated by those networks can take place. It will also likely restrict where those who might not be able to afford home connections can access the Internet. Our concern is that aggressive enforcement will involve decisions about liability that will lead to significant economic and social harm.
[i] Gowers Review of Intellectual Property, http://www.official-documents.gov.uk/document/other/0118404830/0118404830.asp
[v] Pubic data corporation to allow growth, http://www.publicservice.co.uk/news_story.asp?id=15182
[vi] Digital Economy Bill, 'Impact Assessments', March 2010, Table 1, p. 107.
[vii] Ofcom to review practicalities of Digital Economy Act, Josh Halliday, Guardian, February 1 2011, http://www.guardian.co.uk/technology/2011/feb/01/ofcom-review-digital-economy-act
[viii] File-sharing and copyright, Felix Oberholzer-Gee and Koleman Strumpf, January 2010, available at http://musicbusinessresearch.files.wordpress.com/2010/06/paper-felix-oberholzer-gee.pdf (accessed March 2nd 2011)
[ix] The economics of copyright and digitisation: A report on the literature and the need for further research, Christian Handke, SABIP, 2010, p. 12. Available at http://www.ipo.gov.uk/ipresearch-economics-201005.pdf
[x] The economics of copyright and digitisation: A report on the literature and the need for further research, Christian Handke, SABIP, 2010, p 65. Available at http://www.ipo.gov.uk/ipresearch-economics-201005.pdf
[xi] 'Intellectual Property: Observations on efforts to quantify the economic effects of counterfeit and pirated goods', United States Government Accountability Office, April 12, 2010, available at http://www.gao.gov/products/GAO-10-423
[xii] Observations on efforts to quantify the economic effects of counterfeit and pirated goods, Loren Yager, World Intellectual Property Organisations, Advisory Council on Enforcement, Sixth Session, December 2010, available at http://www.wipo.int/meetings/en/doc_details.jsp?doc_id=143312
[xiii] The Adelphi Charter: Promoting innovation and rewarding creativity, 2005, http://www.thersa.org/projects/past-projects/adelphi-charter
[xiv] Gowers Review of Intellectual Property, December 2006, available at http://www.official-documents.gov.uk/document/other/0118404830/0118404830.asp
[xv] Review of the Economic Evidence Relating to an Extension of the Term of Copyright in Sound Recordings, Centre for Intellectual Property and Infortmation Law, University of Cambridge: http://www.hm-treasury.gov.uk/media/B/4/gowers_cipilreport.pdf
[xvi] The Value of the EU Public Domain, Rufus Pollock, Paul Stepan, and Mikko Valimaki, p. 27, available at http://rufuspollock.org/economics/papers/value_of_the_public_domain_eu.pdf
[xvii] Although this figure was critiqued in the BBC Radio 4 programme More or Less in September 2009, http://news.bbc.co.uk/1/hi/programmes/more_or_less/8234117.stm
[xix] See for example The Music Industry's Unbundling Blues, Harvard Business Review, March 2010, http://hbr.org/2010/03/the-music-industrys-unbundling-blues/ar/1
[xxi] Social Trends 41, Office of National Statistics, http://www.statistics.gov.uk/cci/article.asp?ID=2630, January 2011
[xxiii] Pirates are prime prospects for music and video, May 2009, avalailable at http://www.ipsos-mori.com/newsevents/latestnews/13/Pirates-are-prime-prospects-for-music-and-video.aspx
[xxv] Survey available at http://www.pewinternet.org/Reports/2010/Paying-for-Content/Overview.aspx
[xxvi] Media Piracy in emerging economies: Price, market structure and consumer behaviour, Joe Karaganis, WIPO Advisory Council on Enforcement, Sixth Session, December 2010, available at http://www.wipo.int/meetings/en/doc_details.jsp?doc_id=142793
[xxviii] Interview: Justin Ouelette, the man behind Muxtape, Wired, April 2008, http://www.wired.com/listening_post/2008/04/interview-justi/
[xxx] Life After Muxtape: Where do we go now?, Wired, August 2008, http://www.wired.com/listening_post/2008/08/life-after-muxt/
[xxxiv] Parts abridged from ORG's submission to Ofcom's consultation on BBC DRM, see Appendix 2.
[xxxv] See Appendix 3, Response 4
[xxxvi] See Appendix 3, Response 6
[xxxviii] Copyright, competition and collective rights management: A consultation on the growth of innovation in the creative and digital technology industries, Consumer Focus, January 2011.
[xl] Russia uses Microsoft to suppress dissent, New York Times, September 2010, http://www.nytimes.com/2010/09/12/world/europe/12raids.html?_r=1&ref=global-home
[xliv] Some options for copyright exceptions were set out in February 2011 by Consumer Focus: 'IP and Growth: Options for 'fair use' rights in UK copyright law', Consumer Focus, available at http://www.scribd.com/doc/49254033/Consumer-Focus-Options-Fair-Use-Rights-in-UK-Copyright-Law (accessed 2nd March 2011)
[xlv] The Economic Impact of Consumer Copyright Exceptions: A literature review', Mark Rogers, Joshua Tomalin and Ray Corrigan, Consumer Focus, 2010, available at http://www.consumerfocus.org.uk/publications/the-economic-impact-of-consumer-copyright-exceptions-a-literature-review
[xlvi] Many of these concerns are shared by people within the creative industries. One example comes from the resignation of Anthony Hall from the BPI Rights Committee and the IFPI International Legal Committee due to concerns over the approach taken by those organisations to file-sharing. See http://www.thecmuwebsite.com/article/pure-mint-boss-resigns-bpi-committee-over-digital-economy-bill/
[xlvii] An example letter sent by GCB Limited in December 2010 can be seen here: http://acsbore.wordpress.com/2011/01/13/acslaw-letters-issued-by-gcb-ltd/
[xlviii] “Computer games industry threat to downloaders: 'pay up or we'll sue'”, August 20, 2008, http://technology.timesonline.co.uk/tol/news/tech_and_web/gadgets_and_gaming/article4569180.ece
[l] Ob dict by Judge Birss in Media CAT v Adams & others  EWPCC 6, para 15
[li] Ob dict by Judge Birss in Media CAT v Adams & others  EWPCC 6, para 21
[liii] Innocents chased to pay for illegal porn downloads, BBC News, February 13 2011, http://www.bbc.co.uk/news/technology-12424996
[liv] Fresh ACS:Law file-sharing list exposes thousands more, BBC News, 28th September 2010, http://www.bbc.co.uk/news/technology-11425789
[lv] Fresh ACS:Law file-sharing list exposes thousands more, BBC News, 28th September 2010, http://www.bbc.co.uk/news/technology-11425789
[lvi] See for example 'Are the ICO fit for purpose?', Alexander Hanff, Privacy International, February 1 2011, https://www.privacyinternational.org/blog/are-ico-fit-purpose
[lvii] See for example the response of the Museums, Libraries and Archives to Ofcom's Draft Initial Obligations Code consultation, http://stakeholders.ofcom.org.uk/binaries/consultations/copyright-infringement/responses/MLA.pdf
[lviii] 'Operators urged to fight Digital Economy Act switch-off threat', Caterer Search, April 2010, http://www.caterersearch.com/Articles/2010/04/19/333014/operators-urged-to-fight-digital-economy-act-switch-off-threat.htm
[lix] Response of the British Hospitality Association, British Beer and Pub Association, and British Holiday and Home Parks Association, http://stakeholders.ofcom.org.uk/binaries/consultations/copyright-infringement/responses/british_hosp_assoc.pdf
[lx] Communications Market Report 2010', Ofcom, 2010, p. 351.