As the representative body of composers, songwriters, music publishers and their collecting societies in the UK, British Music Rights comments on the DTI consultation on the Enforcement Proposal and emphasises the importance of its impact on the creative community in the UK.

Our specific interest lies in the application of the proposal for the enforcement of copyright and intellectual property, because composers and songwriters rely on the protection provided by copyright (and in some cases trademarks) to earn their living and to optimise the best conditions under which they can continue to create music. Furthermore, music publishers are encouraged to invest in nurturing and supporting new creative talent in the knowledge that they have an opportunity to recoup their investment through the rights afforded by copyright. Composers, songwriters and music publishers rely on both their collecting societies in the areas covered by them to prevent their works from infringement, and the societies therefore rely on good remedies by way of enforcement of rights. One of our member organisations, the Mechanical Copyright Protection Society (MCPS), is well known to the DTI in being actively involved in enforcing the rights of UK composers and publishers through its Anti Piracy Unit and through its development jointly with the Patent Office of the IpCass database of cases.

We broadly welcome the move to introduce a harmonising measure in the EU. Without effective enforcement powers, substantive rights are undermined and made valueless. We welcome the establishment by the DTI of a Focus Group at which we are represented by Nick Kounoupias, Head of Litigation at the MCPS- PRS Alliance.

We do, however, have serious concerns about weaknesses in the Commission's proposal which will have a damaging effect on our efforts to regulate and overcome piracy and other infringement of musical works. We support the report of the Legal Affairs Committee of the European Parliament as adopted on 27th November 2003. This goes some way to address a number of the concerns we raise in this paper.

Urgent timing

We are anxious that the proposal be adopted before the accession of new member states in May 2004 and the election of the European Parliament in June 2004; and hope that Government will assist British music creators and publishers by creating a climate of encouragement both for European and national creativity and business investment; this will also protect the interests of consumers against products of less quality and the effects of organised crime as referred to below.

Key concerns

• Introduction of a commercial purpose/substantial harm test in Article 2.
• The possibility that seized pirated goods can be disposed of outside the channel of commerce (from where they will inevitably be reintroduced into the market) in Article 13.
• Enforcement is an issue where points of real practical importance are often in the somewhat technical detail, so there are other important issues which are set out below, in particular re Article 6 (Presumption of Copyright), Article 7 (Evidence), Article 17 (Damages), Article 22 (Standard Identification Codes).

Criminal sanctions

We understand that Government has reservations with regards to the competence of the European Union to harmonise criminal sanctions under an Internal Market instrument, Article 95 of the EC Treaty. But an enforcement proposal without any reference to criminal sanctions seems inappropriate and provides less protection than TRIPS (Article 61). Criminal sanctions are not only crucial for our anti-piracy activities but also constitute the key deterrent in many instances.

Effects of Piracy in the UK

• The spread of piracy recognised in the proposal causes substantial harm not only to the creative and business community (UK losses through counterfeiting and piracy are estimated by the Alliance Against Counterfeiting and Piracy (AACP) at £9.7bn annually); it also raises public interest concerns regarding the quality and safety of products.
• Government also suffers from lost tax revenues (in the UK it is estimated £1.7bn on VAT alone (AACP estimates for 2002).
• The recently published AACP report "Proving the Connection" (available through their website: www.aacp.org.uk) shows the links between intellectual property theft and organised crime.
• Piracy throughout the soon-to-be enlarged European Union has an impact for the UK and it is the responsibility for the European Union to support the ten accession countries in their enforcement activities.
• Piracy leads to a reduced choice and less cultural diversity for the consumer. The music industry suffers adversely from piracy because of the deficit in income which results in a lack of investment afforded to new and different opportunities, and ultimately, the quality of music on offer suffers because less choice is available. In short, only the criminals can gain.
• In Chapter 4 of the DTI Innovation Report published on 17th December 2003, it is announced that a national strategy for dealing with IP crime would be launched in summer 2004; a timely adopted Enforcement Directive would provide a good context for the launch of such a strategy.

• The music industry contributes £5 billion per annum to the UK plc (equivalent to around 5% of the Gross Domestic Product), generating the equivalent of 130,000 full time jobs and growing faster than the rest of the economy.
• The creative sector is vital for a modern high skill economy such as the UK.
• UK creativity in music is celebrated all over the world; the same applies to all innovative and creative industries in the UK, e.g. fashion. Music publishers, most of whom are SMEs (over 90%), re-invest a significant part of their copyright income in new creative talent.

Article 2 - Scope

Article 2 determines the scope of the proposal. By limiting the effect of the proposal to infringements carried out for commercial purposes or causing significant harm to the right holder the proposal introduces the damaging concept of two tier piracy. No other legislation does that. Indeed it undermines copyright legislation, and it opens up the possibility of difficulties of interpretation as between different member states as to what is commercial and what is significant harm. It seems to imply that some level of piracy is acceptable whereas it should be recognised that all piracy causes harm to the right holder. To the extent there may be a need to differentiate between the consequences of different acts of piracy this can be dealt with in member state legislation but should not be contemplated in an EU legal instrument.

DELETE the words "when the infringement is committed for commercial purposes or causes significant harm to the right holder".

Article 6 - Presumption of copyright

Article 6 establishes the presumption of copyright being vested in the person whose name appears on the work; a similar provision already exists in UK civil copyright law (section 104 of the Copyright Designs and Patents Act 1988). The practical experience of the MCPS Anti-Piracy Unit is that it is a typical ruse of pirates to raise spurious arguments about authorship, title and lack of licence in order to cause delay and to frustrate prosecution. They hope to cause difficulties by insisting on the requirement that the author (often from a foreign country) has to come personally to give evidence. Additionally, this might also result in prosecutors with tight budgets having to drop a prosecution.

AMEND the Article to extend the presumption of "unless proved otherwise" to (a) the fact that copyright subsists in the work and (b) to the ownership of the work where copies of the work have been distributed or communicated to the public bearing the name of the party claiming ownership.

Article 7 - Evidence

Procedures for bringing seized product to court and magistrates vary across the EU and even within the UK, with the possibility in England and Wales for sample counts to be brought (e.g. 1 in 10 of each seized consignment) but a highly burdensome and bureaucratic requirement in Scotland for all products to be brought before the Court. This increases the workload of the enforcement bodies, increases the resources required by enforcement bodies such as police and trading standards officers and can ultimately lead to cases being dropped because of that workload.

ADD wording to Article 7 to state that samples are a sufficient basis for the production of evidence.

Article 8 - Measures protecting evidence

The risk of evidence being destroyed or disappearing apart from the situations covered in the text applies also to equipment, hardware and software used for the making of infringing copies and also to computer records. There are existing provisions within the Article which safeguard the right of the defendant to challenge this.

ADD wording to the Article to include (a) equipment, hardware and software used for the making of infringing copies and (b) computer records.

Article 13 - Disposal outside the channel of commerce

This provision allows disposal outside a commercial situation but overlooks the risk that the product easily re-enters the market. It might be argued that on the basis of this provision a charity would have the right to effect free distribution of infringing copies: this would be wholly unreasonable where (a) they would compete with licensed copies and (b) the infringement might be such that the owner of the rights does not want them distributed at all. This undermines the objective behind the directive and we recommend it is altered to focus on destruction of product. In addition the Article does not apply easily to the on-line and digital environment.

DELETE this Article and rely on Article 14 which confers on the judicial authority the power to order product to be destroyed.

Article 15 - Preventive Measures

This provision is to be welcomed in confirming that financial penalties will apply if someone refuses to comply with an injunction. But it does not deal with the situation as to what happens if the party even then carries on disobeying the court injunction. Many territories regard the disobedience of such an injunction as a criminal offence and the text should preserve this possibility.

ADD "This provision is without prejudice to any other remedies including criminal sanctions where the infringer fails to comply with the injunction."

Article 16 - Alternative measures

This provision would allow an order for compensation in certain circumstances, thus limiting the right holder's ability to use other enforcement measures such as seizure. The economic damage caused by the availability of illegal music can be enormous but is almost certainly curtailed by removing the product from the distribution chain. It is inconceivable that compensation would ever be adequate while the illegal music remained available for purchase or download.

DELETE this Article.

Article 17 - Damages

We welcome the intent behind this Article. But in providing only for damages based on double the normal licence fee or the loss suffered by the right holder, it leaves open the possibility that the infringer will calculate that his profits will be greater than both and therefore go ahead and risk being found out. This is particularly so in cases of organised crime, and it means that the planned deterrent effect of the provision will be nullified.

The final report of the Legal Affairs Committee on Article 17 goes some way to address this issue by enabling right holders to recover lost profits; however, the actual wording of this provision needs to be considered carefully and we look forward to working with Government on adequate wording in the focus group.

The Legal Affairs Committee suggested amendments to Article 17:

Article 17 (1) : To this end, the competent authorities shall award, at the request of the prejudiced party:

• (a) either damages corresponding to the actual prejudice (including lost profits) suffered by the right holder as a result of infringement;…

Article 17 (2): In the case provided for in paragraph 1, point (a), Member States may provide for the recovery, for the benefit of the right holder, of all the profits made by the infringer which are attributable to that infringement and which are not taken into account when calculating the damages.

AMEND the provision to (a) allow the right holder to claim the profits obtained by the infringer without any complications in practice and (b) allow the Court to award additional or exemplary damages where the circumstances are appropriate. Nothing in this provision should stop awards of additional or exemplary damages under the current Copyright Designs and Patents Act and the general law where the Court in its discretion thinks fit.

Article 20 - Criminal sanctions

Proper criminal sanctions throughout the European Union are key for enforcement agencies. We are aware that the Council have reservations about this Article but we would urge UK Government to recognise expressly the importance of having a broad Enforcement Proposal that reflects the criminal nature of much IP theft. This will also be helpful to accession countries.

RETAIN criminal sanctions, as previously stated.

Article 22 - Codes of conduct

The introduction of Standard Identification Codes on CDs should be mandatory rather than optional, offering a further degree of security to legal product.

AMEND the Article to make the introduction of such Codes mandatory.

For further information contact: Florian.Koempel@bmr.org