Martin Kretschmer at the Westminster Media Forum on Copyright and Brexit

“The UK’s rational option is to develop a more open innovation system at home while encouraging the EU to pursue bad copyright policies. But this is unlikely to happen.” Martin Kretschmer reports on the Westminster Media Forum: 

On 22 June 2017, I spoke at the Westminster Media Forum on Brexit and the UK’s future approach to copyright: exceptions, originality thresholds and creator reward. I developed a simple argument for a panel chaired by Lord Clement-Jones. Other discussants included James Bennett (Head of Rights and Licensing, Copyright Licensing Agency), Imogen Heap (Recording Artist and Creative Executive Officer, Featured Artist Coalition), Ben White (Head of Intellectual Property, British Library) and Susie Winter (Director of Policy and Communications, The Publishers Association). Since the transcript is only accessible behind a paywall, I reproduce my contribution below. My intervention came directly after Ros Lynch (Director, Copyright and IP Enforcement, Intellectual Property Office) who outlined priorities for the future of the UK copyright framework.

Martin Kretschmer: “As an academic I can actually risk a bit more than the Intellectual Property Office, I don’t need to sit on the fence.  The question is what kind of direction the UK might take after Brexit.

There are broadly two ways you could approach that.  One is, which is sometimes called the Singapore option, policy could seek to make the UK a place where there are more freedoms, where there’s more flexibility in copyright law and we attract certain companies to set up here because they can do things they can’t do elsewhere.  The other broad line is to say, okay the UK is the place where creative industries assets are protected better than anywhere else.  Initially it seems these are the UK’s strategic options.

But having thought about it for this talk today, I think this is not really how the alternatives will work out. I would like to approach this by looking at the three most contentious provisions which are part of the Copyright in the Digital Single Market Directive.  Article 3 on text and data mining, Article 11 the new neighbouring right for press publishers and Article 13 the potential filtering obligation for platforms.

So please consider each of these proposals, and if they would produce a better outcome for the UK if we go into one of these two directions I gave you. What should guide this kind of decision making?

For text and data mining, the discussion in the European Union may try to widen the new exception. At the moment the proposal on the table in the European Union is not far from what the UK already has on the books, so there’s a restriction for the new exception by beneficiary and by purpose.  I just cite this for you.  The beneficiary of the exceptions are research organisations on the Article 3 draft, so most commercial users are not covered and copying must be for the purposes of scientific research, so for example start-up firms using data analytics would not be covered.

There are now amendments in the European Parliament which try to widen that. Basically the idea is if there’s lawful access then you can text and data mine.  There might be in the future no restriction by purpose or beneficiary.

Now think about this kind of choice and you are the UK after Brexit, what should guide you?  So if you go for the option which says, okay we allow everybody who is a lawful user to data mine, if that’s the UK option and it attracts businesses to conduct operations in this country they can’t do elsewhere in Europe, then probably you want that the EU adopts a narrow exception and the UK a wide one.

Alternatively you could think of, okay we adopt a very narrow exception so that, for example, there’s a second layer of licensing required for universities to take a licence for conducting text and data mining of texts to which they already have lawfully access, so there’s potentially a second tier of licensing if the UK closes the exception. The question is here: would the UK attract more investment from scientific publishers if we have this stronger protection? Not very likely. Publishers’ profits did not suffer from the introduction of the Hargreaves TDM exception.

If you think about it this way it is likely the best choice for the UK if the European Union adopts a narrow exception so we can, as the UK creative industries, exploit abroad, on the other hand we have an open system in the UK so that more innovation can happen here.

So what looks like the rational choice is really quite a paradoxical one from a Brexit perspective: enforcement abroad, open in the UK.

Now let’s think about the other controversial provisions.  The proposal in Article 11 of the Directive is to introduce a new neighbouring right which covers press publishers and would require online news aggregators to obtain licences.

What would be the best option for the UK?  The diagnosis is similar to text and data mining. You would want the EU to adopt the provision which is requiring news aggregators to take licences. The UK rationally would not adopt the new right, and therefore may have more online services that would set up here. At the same time, there would be opportunities for the press publishers here to get revenue streams from abroad.  Okay.

For a German based in Scotland and as somebody who is still participating in the European policy process, you might think that this is really quite a strange argument I have put forward here.  You might almost say it’s a cynical one, but I think it would be rational policy making. This is a Brexit route the UK might want to take.

Is this likely to happen?  Well I don’t think so because as many have already mentioned, IP is core to trade. See for example the issue of exhaustion or country of origin issues. So it is entirely clear that intellectual property provisions will be part of any future association agreement between the UK and the EU post Brexit. It is not something that will be left out of those negotiations. This makes it likely that the room for manoeuvre for the UK to go it alone on copyright will be minimal.  If the EU understands what I’ve laid out as the rational option for the UK, I don’t think this will play too well. It will be seen as regulatory competition similar to tax competition.

In addition there are numerous tiers of international obligations, for example through the bilaterals agreed between the EU and let’s say Korea. If the UK wants to negotiate a new treaty with South Korea it will be bound by the conditions which are already there between South Korea and the EU, so Korea will not be free to negotiate something which looks very different.

In summary the room for manoeuvre for the UK to make her own copyright laws which deviate far from the EU regime is probably small (even if it were the rational path to pursue).  That’s how I leave it for now.”

Lord Clement-Jones:  “There’s a lot of strength of feeling about the, if you like, the value gap and the streaming issues, whereas maybe Spotify are seen as the good guys, YouTube are seen as the bad guys, I mean whose got a view on that?  Nobody from the music industry here who is going to put their head above the parapet?  Any member of the panel who would like to say something?  Martin, you are always good at provocation.”

Martin Kretschmer:  “My view is that the value gap is really…  a revenue gap. There is one party who feels they get not enough money, so that’s always a problem for business. It’s been framed as a “value gap” to impress legislators that this needs to be addressed through a change to the liability regime for intermediaries. I’m not convinced by that. YouTube, i.e. Google, does conclude licences with the music industry at the moment. We don’t quite know the terms of those deals, but if these licences don’t produce the income and the payments do not end up with the artists, it is not necessarily a matter of copyright law that you can’t negotiate. It may be a matter for competition law. It’s quite clear to me that there is a liability already if YouTube does serve content specific to you. You get recommendations, you get targeted playlists. So the immunity, the defence for hosts who do not have “actual knowledge” under Article 14 of the e-Commerce Directive should not apply. That’s in some ways accepted because there are agreements between YouTube and the music industry.  So if these agreements don’t deliver the money, we have to look at a different analysis.  Going down the copyright route is, to my mind, a really bad idea which will have implications for innovation. New entrants into the industry will struggle if the legislator imposes a certain type of technological filtering obligation. This will create a hurdle for smaller companies, for start-ups, for the companies where future innovation comes from.  So that’s my broad take on that issue.  There is a case for greater remuneration of artists but the proposed “value gap” approach under Article 13 of the DSM Directive is the wrong one.  But again, the best outcome for the UK post Brexit would be for the EU to adopt (bad) filtering while the UK does not (and attracts innovative businesses).”

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