Intellectual Property (Unregistered Rights)(Jersey) Law - N.Garnett - Submission - 18 June 2010

INTELLECTUAL PROPERTY RIGHTS (Unregistered Rights) (Jersey) LAW 201- A Report for the Economic Affairs Scrutiny Panel

By

Nic Garnett

Partner, HRO Grant Dawe LLP

June 18th 2010

TERMS OF REFERENCE

The specific terms of reference for the following report are as follows:

1. To examine the rationale for the adoption of the proposed legislation Intellectual Property (Unregistered Rights) (Jersey) Law 201- ( "IPURL").

2. To establish whether the proposed legislation is appropriate for Jersey and  constitutes  the  best  method  of  achieving  the  objectives  of  the legislation.

3. To examine any further issues relating to the topic that may arise in the course of the Scrutiny Review and which the Panel considers relevant.

This report is prepared on the basis of a detailed comparison of the terms of the IPURL and the relevant parts of the Copyright, Designs and Patents Act 1988 of the United Kingdom as amended.

The report also takes into account key elements of the Economic Development Business Plan for Jersey 2010. These are expressed in the plan as follows:

High value economic diversification remains a top priority. The first major element of the new Intellectual Property legislation, the Unregistered Rights Law will, subject to States approval, come into being in 2010. This will open significant business opportunities in the e-commerce sector. It is now clear that the convergence between Intellectual Property (IP) and ecommerce is a  vehicle  for  genuine  diversification.  During  2010,  delivering  a  plan  to exploit the value of IP/e-commerce convergence will be proposed.

............................/....................................................... Strategic Development [2.] Intellectual Property

1. Develop modern intellectual property legislation and strategy in the areas of Copyright, Design Right, Performers' Protection, Patents and Registered Designs, Trademarks and Plant Breeders Rights;
2. Work with the Intellectual Property Services Industry to identify and take advantage of new intellectual property based business opportunities (legal services, patent and trademark agents, licensing bodies, trust and financial Services)

While IPURL covers a range of rights in a variety of creative works and activities, except where specific reference is made otherwise the term "copyright" is in this report used as a convenient means to include reference to al the particular rights as defined in the draft legislation.

INTRODUCTION

This report addresses essentially two questions:

First, is IPURL the law, in terms of its substance, that Jersey needs to accomplish its  internal  objectives  in  fostering  growth  in  creative  and  information  based enterprises and, in terms of its form, is it efficient?

Second, will enacting IPURL allow Jersey to "plug in" to the global network of copyright laws in a way that will assure its position as a basis for developments with international reach?

Before proceeding to exam those questions it is worth looking at on a preliminary basis at some of the issues involved in modern copyright systems. This will provide important parameters for evaluation of IPURL.

Modern Copyright

Copyright  law  has  become  increasingly  complex  and  in  some  respects controversial over recent decades for a number of reasons. The idea of copyright is a relatively simple one. It is embodied in national laws which provide the economic framework for the production of creative works. It does this by granting limited  monopolies  to  creators  in  respect  of  the  exploitation  of  their  works, monopolies which are constructed on exclusive rights to authorise or prohibit the doing of certain acts – copying, broadcasting, etc – in relation to the protected works.

Good copyright laws also have another mission. They seek to establish the appropriate balance between the rights of the creators over their works and access to those works by consumers and other users. Finding the right balance is not easy. It is regularly disturbed by the arrival of new – disruptive - technologies which may either enhance the ability of creators to exercise control over their rights or make access to works more attainable for users. Disruptive technologies have had an enormous impact over the years on the evolution of copyright standards, with the last 15 years bringing the biggest changes through digital systems and the global expansion of the internet.

Some indication of the scale of change that can occur when the balance is lost can be gleaned from the plight of the sound recording industry. In 1999, global revenues for the recording industry amounted to some $40 billion. 10 years later, under  pressure  from  unauthorised  file  sharing  of  digital  music  files,  those revenues had fallen by more than 30%.

Another driver of change in copyright law has been the increasing recognition of its importance to national economies and international trade. Most developed economies can point to studies which suggest that between 5-10% of their GDP depends on the existence and enforcement of copyright.

Conversely, many international trade disputes highlight the distortion which lack of copyright protection and its enforcement can bring to global trading conditions.

These two factors – technology and the economic importance of copyright – are behind the many initiatives undertaken at international, regional and national level to modernise copyright laws. In Europe, developments at the regional level have  had the most impact in the last 20 years with a series of EU Directives extending and harmonising the copyright as it is legislated at Member State level.

At the international level the two key developments in the last 15 years have been the introduction of new international standards for copyright, equipping it to address information society issues, and the reinforcement of established norms through TRIPs.

In seeking to update its intellectual property laws, Jersey must take account of all these developments, not necessarily as a response to a specific treaty obligation but simply to ensure that it provides a proper basis for enterprise and creativity in a globally connected and increasingly knowledge based economy.

It is against this background that examination of the 2 questions should be addressed.

IS THIS THE RIGHT LAW FOR JERSEY?

The extension to Jersey of the UK Copyright, Designs and Patent Act of 1988

The law embodied in IPURL, as presented for review, is for the most part a consolidation and restatement of the provisions of the UK Copyright, Designs and Patent Act of 1988 ("CDPA 1988") and its various amendments. IPURL therefore answers in its own right the most fundamental question regard copyright law reform in Jersey: is there a case for devising a new set of provisions designed specifically for local conditions and objectives? The answer would appear to be no.

The existing law on copyright in Jersey is the Loi (1913) Au Sujet Des Droits D'Auteur. Article 3 of that law provides as follows:

Ledit Acte de Parlement dit "Copyright Act 1911" en ce qui concerne l'Ile de Jersey, entrera en vigueur à la date de la promulgation dans l'Ile de la présente Loi.

Paragraph 36(1), Schedule 1 of the CDPA 1988 provides that the 1911 Act is to remain in force as part of the law of any dependent territory in which it was in force immediately before commencement of the copyright provisions of the 1988 Act. Paragraph 36(3) further provides that if it appears to Her Majesty that provision with respect to copyright has been made in the law of the Channel Islands otherwise than by extending the copyright provisions of the 1988 Act Her Majesty may by Order in Council repeal the 1911 Act as it has effect as part of the law of that territory.

Detailed analysis of the constitutional elements of the copyright law reform process are out of scope for the purposes of this report. It is assumed therefore that appropriate investigation of the constitutional requirements has been conducted to ensure that the provisions of IPURL as necessary replace any existing regulation of copyright in Jersey.

CDPA  1988  as  amended  by  numerous  instances  of  secondary  legislation represents a comprehensive and modern statement of copyright. At the same  time it enables the United Kingdom to fulfil all its obligations at international level in the field of copyright.

Defining copyright law  in the United Kingdom has taken many years, many revision processes, and consultations and embodies the input of many experts in the field.

It is submitted that by using the 1988 act as the basis of IPURL, a number of advantages have been secured:

• The 1988 Act and its various amendments represent an advanced form of copyright law which can be applied and further developed for use in Jersey under local conditions and authority

• The  UK  is  party  to  all  the  relevant  international  treaties  and  has implemented all relevant European Directives in the field. Using the 1988 Act as the basis for IPURL ensure that copyright standards in Jersey meet all current international standards

• In localising the 1988 Act within IPURL the opportunity has been wisely and effectively taken to consolidate the various provisions of the UK

copyright law. Analysis of IPURL

IPURL contains 411 Articles and 2 Schedules. 217 of these Articles are identical to the corresponding provisions of the UK law; 58 of the Articles have no directly corresponding provision in UK law. The remaining articles differ from UK law in specific details of drafting.

A number of provisions of UK law are not incorporated in IPURL

A complete comparative analysis of IPURL with UK law is contained in Annex A.

The key areas of substantive differentiation between IPURL and the UK law are principally the following:

1. IPURL omits the lending right. Lending in UK laws means making a copy of a qualifying work available for use, on terms that it will or may be returned, otherwise than for direct or indirect economic or commercial advantage through an establishment which is accessible to the public.
2. In some areas of UK law, notably in exceptions to copyright in favour of use of copyright materials in research and for educational purposes, the exception is limited to research and educational which is not conducted for profit. That limitation is omitted in IPURL
3. In a number instances – for example in Article 70: exception to copyright for public inspection of copyright material pursuant to statue – IPURL adds reference to communicating such material to the public.
4. The provisions of the UK law relating to the constitution and functions of the Copyright Tribunal are replaced in IPURL with detailed provisions (in Part 8, Articles 380-389) regarding the Licensing Authority.

5. A number of Articles in IPURL contain different provisions regarding the scale of penalties for certain offences in relation to copyright
6. A number of articles in IPURL contain reference to a longer period of limitation (10 years as opposed to 6 years in UK law)
7. Articles 399 to 410 contain extensive provisions enabling the scope and the content of IPURL to extended by Ministerial Order.
8. Schedule 1 contains detailed provisions relating to the liability of service providers for infringing acts committed on the networks they administer.

Efficiency of IPURL

Efficiency in relation to a law such as IPURL covers various aspects:

• Is the law effectively organised so that its provisions can be efficiently navigated by its users?

• Are its provisions susceptible to correct interpretation?

• Does  it  contain  the  necessary  mechanisms  for  review,  revision  and promulgation?

In all these respects IPURL appears fit for purpose. Indeed, in its organisation, IPURL represents a major contribution to better access to many of the provisions of the UK law because the drafters of IPURL have wisely and very effectively taken the opportunity to consolidate the many provisions of the CDPA 1988 and its various amendments. Identifying the specific provisions of UK is somewhat challenging  given  the  fact  they  are  widely  dispersed  through  an  array  of secondary enactments.

Future Proofing

Another aspect of the efficiency of IPURL is whether it represents to the fullest extent the law upon which it is based.

As noted earlier in this report, copyright law has constantly to respond to new challenges  from  technology.  The  UK  origins  of  copyright  law  relate  to  the development of commercial printing and throughout its evolution copyright has attempted to catch up with the latest form of disruptive technology. The vast amount of secondary legislation in the UK since the CDPA 1988 was enacted bears vivid testimony to this process. It is therefore not only appropriate but also necessary that IPURL contains, within Articles 399 to 410 the necessary powers for the Minister, by Order, to update the law as necessary and according to local needs.

Schedule 1 is also an important addition to the UK law base in so far as it spells out in greater detail an important area of regulation, that of ISP liability. Since networked services and particularly the internet became a medium for distribution of copyright works attempts have been made to identify the respective roles and responsibilities of copyright owners and service providers when things go wrong.  Who  should  police  networks  and  attempt  to  stop  the  unauthorised  use  of copyright works, for example through unauthorised file sharing?

Copyright owners argue that ISPs should bear the brunt of the enforcement burden given that it is their services and networks which provide the context for the infringing acts. Copyright owners also argue that ISP are best placed to interrupt infringing activity. For their part, ISP, argue that their networks are essentially "dumb pipes" and that they are mere conduits for infringing traffic over which they cannot and should not be expected to exercise control.

To a significant extent the ISP arguments have prevailed. Most modern copyright laws provide what are referred to as "safe harbour" provisions whereby ISPs can generally escape liability for infringing activities on their networks provided they respond expeditiously to requests for action by affected copyright owners.

The CDPA 1988 contains those provisions which IPURL in turn incorporates and develops. However, IPURL does not however take account of an important new development in UK law: the changes to copyright brought about by the Digital Economy Act of 2010.

Detailed review of the new UK provisions is outside the scope of this report but some of its key provisions are worth noting. The Digital Economy Act addresses in  some  of  its  provisions  the  issue  of  unauthorised  online  use  of  copyright materials, mostly in the form of file sharing. As noted above, the music industry has lost a significant part of its market globally as a result of file sharing (although views differ as to the extent of the loss related directly to file sharing). In the new Act  Ofcom  is  given  important  new  powers  and  responsibilities  for  reviewing developments and instituting technical measures as necessary to deal with wide scale online infringements:

Digital Economy Act 2010 124G

1. The Secretary of State may direct OFCOM to
   1. assess whether one or more technical obligations should be imposed on internet service providers;
   2. take steps to prepare for the obligations;
   3. provide a report on the assessment or steps to the Secretary of State.
2. A "technical obligation", in relation to an internet service provider, is an obligation for the provider to take a technical measure against some or all relevant subscribers to its service for the purpose of preventing or reducing infringement of copyright by means of the internet.
3. A "technical measure" is a measure that

1. limits  the  speed  or  other  capacity  of  the  service  provided  to a subscriber;
2. prevents a subscriber from using the service to gain access to particular material, or limits such use;
3. suspends the service provided to a subscriber; or
4. limits the service provided to a subscriber in another way.

One area of possible future development which is understood to fall within the scope of this provision is the introduction of the so-called "graduated response" or  "three  strikes"  approach.  This  means  the  establishment  of  process  whereby internet users engaged in repeat infringing behaviour can be given a series of warnings  and,  in  the  absence  of  any  response  thereto  and  continuation  of infringing behaviour, have their internet access suspended or terminated.

A law, known as HADOPI (after the name of the agency established to administer the  system)  was  introduced  in  France  in  2009.  Similar  measures  are  being instituted privately by EIRCOM, a leading ISP in Ireland and draft "three strikes" legislation is currently before the New Zealand parliament.

A key question for Jersey is whether IPURL should be further developed to incorporate  the  new  provisions  in  the  UK  law.  While  posing  that  question, however, it is important to note that there is no provision of international copyright law that requires the UK or any other country to legislate on "three strikes" provisions.

WILL IPURL SUPPORT JERSEY AT THE INTERNATIONAL LEVEL?

This is the second key question and it falls to be examined in two ways. First, will IPURL enable Jersey to "plug into" the international copyright recognition so that the  enterprise  and  output  of  its  citizens  and  businesses  enjoy  protection throughout the world. Second, will IPURL create within Jersey a solid enough copyright  regime  to  attract  inward  investment  in  the  areas  of  enterprise  it supports.

Before answering these questions is worth examining the general position of Jersey in relation to the World Trade Organisation. This was admirably expressed in the following way by Richard Plender QC in the article The Channel Islands' Position In International Law.

The Channel Islands do not participate directly in the work of the World Trade Organization; but in common with other small jurisdictions they are liable to be radically affected by it. Indeed, the Channel Islands have a special propensity to be affected by that Organization and by agreements concluded under its aegis since the islands are subject to certain rules of Community law including those governing customs matters and quantitative restrictions. It is by no means easy to determine the extent to which that expression embraces rules applied pursuant to certain of the agreements ratified  by  the  European  Community  pursuant  to  the  World  Trade Organization. It is established, however, that the European Community has sole competence, pursuant to Article 113 of the EC Treaty, to conclude multilateral agreements on trade in goods, under the aegis of that body; and that the Community is jointly competent with the Member States to conclude the General Agreement on Trade in Services and the TRIPS Agreement.

The Agreement establishing the World Trade Organization was approved by Council Decision 94/800/EC of December 22nd, 1994 and thus formally incorporated into Community law. The European Court has indicated that some, at least, of the provisions laid down by agreements concluded under the aegis of the World Trade Organization constitute rules governing the removal  of  quantitative  restrictions  on  trade,  including  trade  between Member  States.  That  appears,  for  instance  from  the  ruling  given  in  response to a request from the Hoge Raad in Case C-316/95. Generics BV v Smith Kline & French Laboratories, where the point at issue was the TRIPS Agreement.

While some aspects of TRIPS are concerned with the promotion of free trade in services and are therefore inapplicable to the Channel Islands, others relate to the removal of obstacles to trade in goods and thus appear in principle applicable. The TRIPS Agreement, which came into effect on January 1st, 1995, is a part of the Marrakesh Agreement establishing the World Trade Organization, and joined to date by 132 members. It is the most comprehensive multilateral agreement on intellectual property. It establishes substantially higher standards of protection for a full range of industrial property rights than are embodied in current international agreements such as the Paris Convention for industrial property (patents, trademarks and trade secrets) or the Berne Convention for copyrights . The intellectual property rights covered by the TRIPS Agreement are: copyrights, patents, trademarks, industrial designs, trade secrets (undisclosed information), integrated circuits (semiconductors), and geographical indications.

In the area of copyrights, the TRIPS Agreement obliges the parties to comply  with  provisions  of  the  Berne  Convention,  except  for  that Convention's requirements on moral rights; protects computer programs as literary works and databases as compilations under copyright; imposes an immediate obligation on parties to grant owners of computer programs and sound  recordings  the  right  to  authorize  or  prohibit  the  rental  of  their products; establishes a 50-year term for protection of sound recordings, as well  as  requiring  signatories  to  provide  protection  for  existing  sound recordings  and  sets  a  minimum  50-year  term  for  protection  of  motion pictures and other works where companies may be the author.

It appears inevitable that both bailiwicks of the Channel Islands will have to adopt legislation to secure the application of the TRIPS Agreement, in so far as it has a bearing upon the free movement of goods.

As noted, TRIPs reinforces the provisions of the Berne Convention and brings it within the World Trade Organisation. Other provisions of international are also relevant, most notably the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty of 1996. These two treaties were established to extend and adapt certain areas of copyright law to the new challenges of the information Society. They also form the basis for a number of the EU Directives established in recent years.

As  further  noted  above,  UK  law  is  compliant  with  all  relevant  international provisions  related  to  copyright  and  as  such  the  CDPA  1988  as  amended represents a firm basis for international integration. There is nothing in IPURL as prevented for review which would prevent it operating in the same way for Jersey.

CONCLUSIONS & RECOMMENDATIONS

The Scrutiny Panel is advised that with respect to the considerations identified in the Terms of Reference IPURL effectively translates the key provisions of the UK law into an efficient legislative proposal for Jersey.

That said, the Scrutiny Panel may wish to consider a number of areas for deeper investigation at this stage:

1. The question of future proofing and in particular whether there is a case at this  stage  of  incorporating  into  IPURL  analogous  provisions  those contained in the UK Digital Economy Act 2010, specifically relating to the use of technical measures.
2. What is the plan for the internationalising Jersey's new copyright regime based on IPURL: what are the objectives; what are the means and what are the timelines?
3. There may be a case for a deeper examination of the copyright law as proposed  through  IPURL  and  other  areas  of  law,  for  example  those related to online commerce and personal data protection. May aspects of modern  copyright  law  are  closely  interconnected  with  other  areas  of emerging regulation.
4. There may be a case, for example in relation to certain provisions in IPURL relation to licensing schemes and the Licensing to conduct an Economic  Impact  Assessment  to ensure  that  what  is  proposed  is consistent with the scale of actual need.

Annex A

Intellectual Property (Unregistered Rights) (Jersey) Law 201- Comparison of Articles with UK Copyright Law