HC Deb 09 July 1982 vol 27 cc588-607

Order read for resuming adjourned debate on Question—[14 May]—That the clause stand part of the Bill.

Question again proposed.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill reported, without amendment.

12.6 pm

Mr. Michael Shersby (Uxbridge)

I beg to move, That the Bill be now read the Third time.

The Bill, which consists of only one substantive clause, has been fully debated, amended and approved in the other place. It was given an unopposed Second Reading in the House and it has completed a most satisfactory Committee stage. I am glad to say that the Bill enjoys the support of both the Government and the Opposition. It is based on a specific recommendation of the Whitford report on copyright. The recommendation, which was supported without reservation by the Government, stated that to be in possession, by way of trade, of infringing copyright material should be an offence under section 21 of the Copyright Act 1956.

At present, summary remedies for the infringment of copyright are provided in section 21 of the 1956 Act. It is a feature of all the offences that knowledge on the part of the accused has to be proved. I understand from several interested organisations, particularly those concerned with copyright in music, records and films, that, because of the difficulty of proving guilty knowledge, the criminal provisions are of little use and are little used in this country.

The record industry recommended that the section should be amended to make possession an offence, and to shift the onus of establishing innocence on to the accused. It was said that such a change had already been introduced—for example, in the Theft Act 1968 in relation to receiving stolen goods—to deal with the increasingly sophisticated offender. The film industry made a particularly strong plea for strengthening the criminal provisions under copyright law to provide the industry with effective protection against an increasing level of pirate activity.

We all know that technology has made control of copyright in films more difficult. Cheap and efficient equipment for making and exhibiting films in 16 and 8 mm width and the subsequent boom in the club and home movie markets have widened the avenues open to the film pirates. The development of video recorders, in particular, has made piracy even easier. Feature films are increasingly being transferred to video cassettes and programmes can easily be recorded off the air.

Once a convenient film has been obtained, further copies can be produced simply. There is no longer any need to retain the original pirate copy of the film. If it has been illicitly procured, it can be returned to the original owner, frustrating proceedings for theft. Copies can be made from films from renting libraries. There are ready markets for pirated prints in foreign countries.

The film industry has urged that changes in the law be made to remove obstacles to the effective prosecution of film pirates and dealers in, and users of, illicit copies. The film industry also urges effective deterrence by way of penalties other than the trifling penalties for criminal breaches under the existing Act. I shall have more to say on that matter. The film industry has also made the point that the penalties should be of the same order as those provided under the Theft Act.

Because of the difficulty of proving guilty knowledge to the satisfaction of the court, it has been suggested that the existence of a claim to ownership of the copyright in a film by a notice in the film title in some advertisements or otherwise should create presumption of existence of ownership of copyright sufficient to defeat a lack of guilty knowledge claim. At present, the maximum fine in respect of any one transaction is £50. Submissions recommending that the penalties for offences under the Act be raised to a more realistic level in keeping with present conditions have been made by large numbers of interested organisations.

It is said that the profitability of pirating is such that, unless substantial penalties are introduced, there can be no effective deterrent by way of summary proceedings. My Bill is an interim measure—a valuable interim measure, if I may say so, pending new comprehensive Government legislation on copyright—to provide a real deterrent against the piratical manufacture, sale and hire of sound recordings and video recordings. Video piracy causes losses amounting to an estimated £100 million a year to the legitimate sound recording, film and television industries as well as damage to the interests and livelihood of all concerned.

I should like to pay tribute to the magnificent achievements of the film and television industries. Their expertise and high standards have resulted in substantial exports and substantial foreign currency earnings for the United Kingdom. There is an enormous loss of revenue, which must be a cause of great concern to my right hon. and learned Friend the Chancellor of the Exchequer. I am surprised that my right hon. and learned Friend has not come forward earlier with an amendment to deal with this enormous leak from the tax net. Admittedly, the Bill does not go as far as many would like. It will be appreciated how difficult it is for a private Member, working in close co-operation with a Member of the other place, to go as far as one would like in amending the law on such a complex subject.

The Bill does not deal with penalties. These are already being increased to a useful extent in the Criminal Justice Bill. More can be done under that Bill in future and through the Government's comprehensive copyright legislation when it eventually emerges.

In considering penalties, it is interesting to note the comments made by my hon. Friend the Member for Howden (Sir P. Bryan) in his excellent Adjournment debate on 11 June. He said: Before setting off for Europe, President Reagan signed into law the Piracy and Counterfeiting Amendment Act 1982, which provides for stricter criminal penalties for record, tape and motion picture piracy and counterfeiting. Under the new law, which came into effect the next day, 25 May, sound recording and motion picture pirates and counterfeiters, including first-time offenders, face maximum felony penalties of up to five years imprisonment or fines of up to $250,000."—[Official Report, 11 June 1982; Vol. 25, c. 579.] That gives a good idea of the serious view that the United States Government take of the problem that we are discussing. I commend to my hon. Friend the Under-Secretary of State for Trade, Public Law No. 97, passed by the Senate and the House of Representatives, which deals with this important point. I hope that the British Government will take account of the scale of penalties enacted in the United States when they come to consider their own more comprehensive legislation which, I hope, we can expect in the near future.

Nor does the Bill deal with the complex issue of piracy of copyright material by private individuals for use in their own homes. Nevertheless, there remains the need for urgent action in the area dealt with by this simple one clause Bill. That is strongly endorsed by early-day motion 424, standing in my name, which states: That this House calls on Her Majesty's Government to stamp out as a matter of urgency the great and growing market in pirate video cassettes; draws attention to the fact that some 65 per cent. of video cassettes sold in the United Kingdom are now seen by this means, and that this is now a serious area of illegal activity which is having a gravely damaging effect on both the production and exhibition sides of the British film industry. I am happy to say that 141 hon. Members on both sides of the House have supported the motion. I also draw the attention of the House to a motion in similar terms in the name of the hon. Member for Keighley (Mr. Cryer), which has also attracted widespread support.

I should like to recall the words used to describe this Bill by my hon. Friend the Under-Secretary of State for Trade in the debate on video cassette piracy on 11 June. My hon. Friend said: I have done all that I can to encourage the passage of the Copyright Act 1956 (Amendment) [Lords] Bill which was introduced by the noble Lord Fletcher. The Bill is a good step in the right direction … The Bill passed through all of its stages in the House of Lords. It received its Second Reading in the House of Commons on 7 May and appeared for its remaining stages on 14 May … I thought then that the Bill was well on its way to the statute book … We were all disappointed when it was blocked, perfectly properly on procedural grounds for reasons we understand. It was an important Bill that was lost in one of those not too rare House of Commons deliberate procedural tangles. When the Bill returns on 9 July, I hope that it will receive the approval of the House. In the meantime, I hope that that will satisfy my hon. Friend that the Government are not so comatose or inactive as he might think."—[Official Report, 11 June 1982; Vol. 25, c. 582.] I am happy that we are here again on 9 July discussing the Bill. I hope that the measure will receive the support of the House today. I certainly confirm that the Government are not so comatose as some hon. Members have suggested on this matter. I pay tribute to the sterling work done by my hon. Friend the Under-Secretary of State for Trade whose constant enthusiasm for the Bill, deep understanding of the problems of the film and television industries and willingness to fight for their interests are now becoming widely known.

In the light of my remarks, I hope that the House will agree that, within the limited time available, the Bill should receive a Third Reading and be listed for Royal Assent. I commend the Bill to the House.

12.19 pm
Mr. John Fraser (Norwood)

I welcome the Bill and particularly the provisions on the piracy of cinematograph and television film. Commercial piracy of such film is widespread and constitutes a threat to the survival of the film industry, particularly in this country where there is no effective legislation. Lists of video films available from tape libraries show that there is a danger of a drift into the production of nothing but cheap, nasty, violent and sordid films, which are made on a low budget and have some appeal, but are damaging to the reputable film industry.

I believe that the cinema film is the great original art form of the twentieth century and is comparable to compound art forms of other centuries such as opera and ballet. At its best, cinema is magnificent and the great directors and producers are entitled to rank alongside Rubens and Beethoven as masters of their art. Film is a magnificent art form at its best because it brings together writers, actors, composers, cameramen and prop makers. It is superb on the grand scale and it would be a tragedy if it were destroyed.

We appreciate that films are expensive to make and can be supported only by patronage. The piracy of films by video tape and illicit copying is destroying patronage, and production money is not coming through.

Those who plunder and pirate films and other recordings by making illicit tape copies are as much art thieves as someone would be who stole the Mona Lisa or a Rembrandt painting. It would be a tragedy if the brilliant spectacle of film, which developed from technology in this century, were to be destroyed by the technology of the video recorder. Piracy places in jeopardy the industry and the livelihood and prospects of artists, technicians and workers. I strongly support the Bill, and I hope that it will be vigorously prosecuted by the Government.

I agree with the hon. Member for Uxbridge (Mr. Shersby) that the Bill does not go far enough. We understand why that is, but I hope that the Under-Secretary will tell us about fuller legislation to protect the industry and those who work in it. Would it be possible to promulgate a code among video recording manufacturers to make detection easier? There are difficulties in proving knowledge on the part of pirates.

I have noticed when looking through video tapes that it is difficult to distinguish those on which films are recorded from those that are freely available in the shops. It may be that all those that I have looked at have been pirated copies, but there is a need for more effective methods of producing copies so that knowledge can be proved more easily.

I welcome the initiative of the hon. Member for Uxbridge. His Bill is supported by the whole House, and we look forward to its vigorous prosecution as soon as it becomes law.

12.23 pm
Sir Paul Bryan (Howden)

I wish briefly to congratulate my hon. Friend the Member for Uxbridge (Mr. Shersby) and to welcome the Bill. It would be churlish not to welcome a Bill which seeks to remedy the evils of the theft of copyright, and if I tend to underline the Bill's limitations it is simply to stimulate the Government to hurry further down this road with all speed.

When a criminal is contemplating crime, I imagine—not having had personal experience of that-that he instinctively has three considerations in mind: the state of the law, the penalties, and the chance of being caught. If we look at the Bill in that light, we see that it makes the law stronger by making possession of an infringing copy of a recording an additional offence. That might make a would-be criminal think twice, but when he looked at the penalty and found that it was a fine of £50, or not much more, he would laugh out loud and go ahead.

If the would-be criminal went further and thought about the chance of being caught, he would see that there is almost no activity by the police on this front. A criminal might be making thousands of pounds out of his crime, but what policeman will arrest him when the penalty is only £50?

Although I fear that the Bill will not be particularly effective in practice, I hope that our discussions will prod the Government and help the Under-Secretary, who is keen on the Bill, in the direction in which he wants to take it.

Will the Under-Secretary tell us the timetable for the reform of copyright? The work started with the establishment of the Whitford committee in 1973. The Government will still be considering comments on the Green Paper until August and the EEC must be consulted after that. I do not know how long that will take, but it is obvious that there is no chance of legislation in the next Session, which means that there is no chance of legislation in this Parliament. It is clear that long-term legislation is not in sight.

In those circumstances, it is all the more urgent that we should increase the penalties for breach of copyright. I understand that that can be done quickly, but perhaps the Under-Secretary will tell us what can be done in that area and how long it will take to bring in the necessary amending legislation. My hon. Friend the Member for Uxbridge mentioned the penalties in America. They are very much greater than the penalties in this country and one can see that they could be effective immediately. That is why I press the Government to increase the penalties with all speed. It is the one action which could be immediately effective.

If the Government do not take such action, the rewards of the crime will continue to boom, penalties will remain derisory and detection will remain unlikely. Video piracy, which is already widespread, will spread even further and become more deep-rooted and harder to eradicate.

12.27 pm
Mr. Bob Cryer (Keighley)

I support the Bill in principle and I am sure that it will be given a Third Reading. However, as has been emphasised on both sides of the House, we need Government legislation and I hope that the Under-Secretary will give us the timetable for its introduction.

Video piracy is a relatively recent technological development, but action to curb it is urgently needed. It is estimated that piracy results in losses of about £100 million a year, a fair chunk of which is lost to the film industry.

It is expensive to embark upon film production. Even a modest production—for example, "Gregory's Girl" —costs about £200,000. Larger productions such as "Octopussy"—the next Bond film—and "Superman 3" being prepared at Pinewood will have budgets of £10 million or more. "Star Wars", which is being prepared in a British studio, has a budget of several million pounds. They all generate a great deal of employment. Pinewood has about 500 or 600 full-time staff and an apprentice scheme teaching 40 people various aspects of film manufacturing. It is the only permanent studio with permanent staff in this country. The work of all those people over several months can be set aside by relatively cheap equipment costing a few thousand pounds that can be used to produce pirated copies of the films if a print can be obtained from a projectionist or hired from a library or a video cassette that has become available.

Video piracy will increase if there is no firm legislation. It is a lucrative source of revenue and the seed corn for new productions will be restricted. Those people who invest several million pounds in a very risky business will see the revenue from their ventures diminish and they will not be prepared to finance further productions. Video piracy will significantly affect their revenue unless clear and severe curbs are placed on video pirates.

I agree with my hon. Friend the Member for Norwood (Mr. Fraser) that the film industry is a popular twentieth century art form. We should take action to give people who invest their money in film production—there are too few of them—the opportunity to ensure that the revenue returns to them for further productions.

The Whitford committee made a number of recommendations. In paragraph 708 of its report it said: We have been told by a number of interested organisations, particularly those concerned with copyright in music, records and films, that because of the difficulties of proving 'guilty knowledge' the criminal provisions are of little use and little used in this country. The Bill does not provide an answer to the problem of guilty knowledge.

The Whitford committee proposed that possession itself should be a criminal offence, but that it should be a defence for a person to show that he had no cause to believe that the item was pirated. That should be the subject of action by the Government, and the Bill is welcome because it incorporates one of the Whitford committee's recommendations—that it should be a criminal offence if a person is dealing by way of trade. The problems of proving the case remain. I hope that this legislation will encourage the police to take action against video pirates and the libraries that offer pirated films for hire. The difficulty of proving guilty knowledge still remains, and I hope that the Government will do something about that.

The Criminal Justice Bill presently proceeding through the House will affect all penalties, but legislation aimed at a particular problem has a greater impact if it contains the penalties. The Government should draw the attention of all interested bodies, including the police authorities, to the increase in penalties in related legislation.

With piracy there is no Eady levy revenue as there is with cinema seats. When people buy or hire pirated video cassettes they do not go to the cinema, and there is no Eady levy money to help the producer or the National Film Finance Corporation, which is an important source of finance for small indigenous films. We should encourage the making of films like "Gregory's Girl". The National Film School provides an opportunity for people to learn the art and craft of making films. It is an important source of new talent and an important opportunity for television. The Children's Film Foundation is an important opportunity to provide films designed for young audiences. There is a dearth of films for young audiences. We should diminish the emphasis on sex and violence and make films suitable for children. All those opportunities are at risk because of piracy. There is no revenue, too, for the film producer. However, there is no Eady levy on the sale of video cassettes properly produced.

I welcome the Bill, although it has limitations. It is a mark on the way to control. The onus is on the Government to produce comprehensive legislation to deal with the problems.

12.36 pm
Mr. Tim Brinton (Gravesend)

I congratulate my hon. Friend the Member for Uxbridge (Mr. Shersby) and support the Bill. I, too, have qualifications, but they are not deep criticisms.

The Bill is the first act in a long play that I hope the Under-Secretary of State will look at in total fairly soon. The film industry's problems are not confined to piracy of copyright. Many other areas need to be looked into. The whole issue needs to be dramatically pulled together if we are to have a surviving British film industry.

Stealing should be stopped. When people in a high growth industry steal who may not normally think of thieving, they must be made to realise that they are stealing and not only stealing property but artistes' creative ideas and their livelihood. I welcome the first attempt to implant in the minds of video pirates who have set up shop and may believe that they are doing no wrong, the fact that they are taking away the livelihood of actors, technicians and struggling film directors, who, contrary to popular belief, are not rich, fat cats living off the cream of the land.

With huge and accelerating technological advances we may not fully be able to control the copyright problems that will face us in the next few years. Soon we shall be looking in more detail at the problems of cable television and satellite. Projecting ahead five or 10 years, and thinking about copyright as it was designed for the written word, it is impossible to see how the Government can maintain control. Urgent consideration should be given by the Government to a levy on every blank tape, be it video or sound, sold in this country to be redistributed through, perhaps, the Eady fund. There is a not inconsiderable market for sound tape pirates. Even if we cannot control the piracy, the levy funding could go to the creation of artistic works of film or sound.

I am worried about whether the policing will be sufficient to deter these criminals—for that is what they are. I regret that we have had to avoid the necessity of proving sale or hire. In my morality there is a similarity to driving and drinking offences, but someone should not be guilty until they are proved guilty. I regret the necessity, but I accept the reasons, for going down that path. We should consider how to solve that problem.

I am also anxious because the honest maker of small films might be caught by the Bill. The Bill quotes section 21(4A) of the 1956 Act, part of which reads: Any person who, at a time when copyright subsists in a sound recording or cinematograph film, by way of trade has in his possession any article which he knows to be an infringing copy of sound recording or cinematographic film". The phrase "any article" is a wide definition. A man making a documentary film who wishes to put a music track on it might have in his possession a tape from a library. If he uses it he might have to prove that he did not know that the tape was pirated. That might affect a genuinely, hard-working and honest technician who has nothing to do with big films and pirating copies.

I welcome the Bill because the money chasing out of the film industry towards pirated cassettes has closed cinemas throughout the country. I hope that all hon. Members have received letters such as I have received from the manager of a local cinema. Mr. Gleitzman, the manager of the ABC cinema at Gravesend, drew the matter to my attention. I hope that all cinema managers realise that if they do not police their cinemas and stop the exodus of reels of film from the projection room the avenue will remain open for a high-rise, high-growth business. I hope that we are on the way to a significant reform for the British film industry.

12.42 pm
Mr. Neil Thorne (Ilford, South)

I congratulate my hon. Friend the Member for Uxbridge (Mr. Shersby) on promoting the Bill. This is the fifth private Members' Bill that he has promoted. The Bill is important. I assume that it contains only one clause because of the difficulty of getting private Members' Bills through Parliament. As a result the Bill omits several important issues that we should take into account. I trust that the Government will take those issues up on our behalf.

The Bill is a direct result of the Whitford committee's recommendations. The committee believed that this was the way to deal with the matter easily and swiftly. A £50 fine is now totally inadequate. An article by Simon Kinnersley in the Daily Mail of 28 April carried the heading: Super spies on a pirate hunt. The article mentioned the Nottinghamshire couple who happily paid back £750,000 in respect of their pirate video businesses.

No one could accuse me of being other than in favour of small businesses. However, enterprise of this kind takes matters to ridiculous lengths. We must, of course, be fair to the industry as a whole, and there is no doubt that the different companies are unable to provide an adequate film service unless they receive the rewards that are theirs by right. Unless we are able to channel to them a respectable proportion of the royalties to which they are entitled, we are failing in our duty to ensure that we have the healthy film industry that we require.

In recent years we have experienced a large measure of sex exploitation through the medium of film because, for a period, that seemed the only way in which funds could be raised. I hope that we have passed through that phase and that we are getting on to a much more healthy basis. But it is entirely wrong to put that in jeopardy by reducing the funds that should rightly go to the producers of films. That being so, a fine of £50 is wholly inadequate.

I greatly appreciated the remark by my hon. Friend the Member for Uxbridge about the gross loss to the Exchequer, because this is extremely relevant. If £100 million a year is being lost in this way, it is being stolen from other taxpayers. Other taxes are having to be charged at a higher rate because the people concerned are not paying their fair proportion of the total charge on the economy. I should have thought that this was of particular interest to the Treasury and that it should set about putting it right. I hope that this is but the first step which will be taken and that my hen. Friend the Under-Secretary of State for Trade will be able to say that we can expect some considerable enlargement.

It appears from the Whitford committee report that no less than 65 per cent. is the estimated amount of video business which does not go through the proper channels. That suggests that this aspect of fraud in the industry is considerable. Major steps have now to be taken to put matters right. I call upon my hon. Friend the Under-Secretary to announce some very substantive measures from the Government for dealing with this issue.

12.49 pm
Mr. K. Harvey Proctor (Basildon)

I join other hon. Members in congratulating my hon. Friend the Member for Uxbridge (Mr. Shersby) on promoting the Bill in the House of Commons, it having been introduced in the other place earlier.

As I predicted in my opening remarks in an earlier debate, we seem to be having a film day. With a short intermission, today's debates have been largely about the film industry.

If the Cinematograph (Amendment) Bill was important from the film industry's point of view, this Bill is of even greater importance. It will have important commercial effects on the film industry.

I join other hon. Members in paying tribute to the British film industry and all who work in it. I can well understand the frustration, if not despair, at the exploitation of loopholes in the law—an exploitation that has increased as a result of technological developments in copying and broadcasting. As my hon. Friend the Member for Gravesend (Mr. Brinton) said, it has created greater opportunity for stealing; not just money but other people's enterprise and creative ability—one of the worst forms of stealing. It means that jobs in the film industry are put at risk, and that in a particularly difficult period.

I congratulate my hon. Friend the Member for Uxbridge on bringing forward legislation to deal with the problems. The motion that was tabled to ensure that there was a Third Reading debate is no criticism of the Bill. It gives Parliament an opportunity to debate the Bill and to exert a little muscle with regard to weaker areas where the Bill might not go as far as one would wish. That is no criticism at all of my hon. Friend. We all know the difficulties that face an hon. Member in introducing legislation. Only a limited time is available and I have my eye on the clock because I do not want to put this admirable Bill at risk.

My hon. Friend the Member for Howden (Sir P. Bryan) made three telling points about the objectives of copyright legislation, the ignoring of which would enable people to flout the law. His first point concerned the state of the law, the second penalties and the third the possibilities or otherwise of being caught committing piracy.

The Bill admirably fulfils the first objective. As the title makes clear, it makes it an offence to be in possession of an infringing copy of a sound recording or cinematograph film by way of trade.

Perhaps I should stress the words "by way of trade", because my hon. Friend made it quite clear that there was no attempt in the Bill—I should be nervous of supporting any such attempt—to protect the practice of copying videos from television in private homes, although some right hon. and hon. Members may disagree about that. However, we should protect the personal enjoyment in the home of many people who possess a video for their personal use. The Bill in no way undermines that, nor does the House wish to do so.

My hon. Friend's second point concerned penalties. I sympathise with him when he says that the penalties for committing an offence under the Bill will be pitifully low in comparison with the rewards that pirates enjoy from their ill-gotten gains. I believe that £50 and £25 are the figures. Before my hon. Friend intervenes to put me right, I should say that it is a summary offence to engage in certain specified types of dealing, although the current maximum fines of £25 per infringing copy and £50 per transaction are—in the view of the Minister, and certainly that view is shared by me and many right hon. and hon. Members—far too low.

Mr. Shersby

Perhaps I should make it clear that the fines apply per infringing copy. If the pirate has 100 copies, the fine can apply 100 times. That makes a big difference, when one thinks of the increase in the fines being contemplated in the Criminal Justice Bill now being considered in another place.

Mr. Proctor

I thank my hon. Friend for that intervention. I said that the fine was £25 per infringing copy, and my hon. Friend is quite right to introduce the multiple effect. I do not have a video, although I wish that I had. Perhaps I should have bought one this morning, instead of talking about videos. I know that video cassette tapes are expensive—at least those that one buys in shops are relatively expensive. They can be as much as £30 or £40, and some are even more expensive. So even at £25 per infringing copy, I imagine that there is a substantial profit margin on them to make the pirate's work worth while, although there may be legislation to confiscate the tapes. Perhaps the Minister will say something about confiscation of pirated copies which are proved to be such in court and what happens to those tapes. Most right hon. and hon. Members think that the present penalties are woefully low and must act, if not as an encouragement, certainly as no bar to the activities of the film pirates that we are trying to catch in this legislation.

My hon. Friend's third point was about the chance of being caught. The Bill goes some way to making it easier for the prosecution to establish a case against the person who is caught. It does not do much about opportunities to catch the person who is doing the film pirating. How will the Bill affect the burden on the police, who already have onerous duties, of catching the film pirates? Does my hon. Friend have any statistics about police success so far? If he cannot give me that information now, it will not lessen my support for the Bill, but perhaps he or a Minister from the Home Office will write to me later.

Several hon. Members mentioned the new technology that makes it easy to pirate tapes. I made some inquiries of a respectable and responsible video duplicating company that works for the BBC, independent television and the major film companies. I was told that that small firm can turn out in one day more than 1,000 tapes because of the sophisticated machines that it uses. I am sure that other companies can turn out even more tapes. Technically, it is easy to copy tapes and to steal, as my hon. Friend the Member for Gravesend said, the copyright of others and the fruits of the investment that others have made.

Does my hon. Friend know anything about the breaking and entering into official companies overnight in order to use their machines to make illegal tapes? I understand that the offence occurs and that respectable companies must have tight security.

Some of my hon. Friends mentioned the loss of revenue to the Exchequer. I should be interested to know whether the Exchequer has calculated the loss in revenue to public funds. I know that it must be a difficult calculation, but it would be helpful if my hon. Friend could give us an estimate.

Many of my hon. Friends have said that this Bill is the first step. Legal remedies already exist, some of which have proved effective if they are applied, in the Minister's words "energetically and systematically".

In response to my letter to my right hon. Friend the Home Secretary my hon. Friend wrote to me. The third paragraph of his letter states: I believe that more must be done to curb what is a growing criminal activity. Video piracy damages those who legitimately market video films, those who claim legitimate royalties and, further back in the chain, those legitimate film producers who are looking to profits from video sales to contribute towards the original cost of making the film or future films. Furthermore, pirate video films, which appear on the market before the legitimate product, may damage the trade of cinemas showing the screen version. My hon. Friend added that we cannot continue with a situation in which 75 per cent. of the retail side of the trade is, in his estimation, illegal. He explained that this will undermine the general public's faith in the law of the land.

It was right for my hon. Friend the Member for Uxbridge to introduce the Bill and it is right for hon. Members on both sides of the House to press my hon. Friend the Under-Secretary of State, who has been most understanding, as has his Department, about these matters and concerns, to go even further than is provided for in the Bill. I am delighted to support the Bill and I hope that it will receive Royal Assent and become an Act in the not too distant future.

1.7 pm

Mr. Hugh Dykes (Harrow, East)

I shall repeat briefly some of the sentiments expressed by my hon. Friend the Member for Basildon (Mr. Proctor). I was glad to hear him express warm support for the Bill, which came from another place and was presented to this place by my hon. Friend the Member for Uxbridge (Mr. Shersby). We should pay a warm tribute to my hon. Friend for the work that he has done. He has become one of the leading experts in the House on this complex and complicated area of the law. He is perhaps second only to my hon. Friend the Under-Secretary of State. They might decide between themselves that they are both equally expert.

That gives me the opportunity to say that I am grateful for the work that has been done by my hon. Friend the Minister on this subject. It is not an easy one to tackle and I think that my hon. Friend the Member for Uxbridge will be the first to concede that the Bill is an interim holding measure. More will need to be done fundamentally to tackle the complicated area of copyright.

I apologise for not being in my place when the debate on Third Reading began. Friday is by convention, habit and practice the day when constituency cases are tackled that have had to be postponed because of the pressures of the House earlier in the week. I was delayed because I was dealing with a number of constituency matters.

I shall concentrate on one of the most acute areas of infringement of copyright. It is one in which a flourishing crime practice is building up in a way that is most distressing and disturbing for the authorities to contemplate. I refer to video piracy. The use of the video cassette is one of the main expressions of general piracy and infringement of copyright. There are growing instances of cinematograph film being transposed on to cassettes to he used in video clubs illegally without any permission or payment of copyright, or any official authorisation under the 1956 legislation. The clubs and the members flourish, but the creators of the original copyright and the cultural creation that went behind it—the leading box office film, for example—has no recourse or benefit.

Then there is the piracy of video cassettes themselves, in which the original creative label is taken and the cassette reproduced illegally. That, too, is now very big business. This very serious problem has grown dramatically even in the last year, having started rather quietly a few years ago. The sooner decisive action can be taken in what we all acknowledge to be an extremely difficult area to tackle, the better it will be. I know that the industry itself has made a number of suggestions which deal not only with the strengthening of the copyright law.

As we know, video piracy basically involves producing illegal copies of movies on video tape or copies of original video cassettes. There is beginning to be trouble, too, with video discs, which are brand new and have scarcely started. The copies are then sold or hired on a temporary or longer-term basis. There are various manifestations of this type of activity, but I am extremely worried at the way in which organised crime has moved in so quickly to take advantage of the weaknesses in the present Copyright Act, which we all know is utterly inadequate to deal with this type of criminal activity. Lord Fletcher has therefore done us a service in launching the Bill, and my hon. Friend has done us a greater service by bringing it to the House of Commons.

The Bill makes it an offence for any person to have in his possession by way of trade a copyright sound recording or cinematographic film item which he knows to be an infringing copy. In this context, I emphasise again that the fine may be per unit or per item rather than merely covering a collective act or multiple copies.

A new copyright Act could not be completed soon enough, as we know from the difficulties that arose in connection with the Green Paper last July. The damage to the entire video industry that would occur while awaiting more fundamental legislation might be irreversible. That is the rationale of the Bill. It is sad to reflect—although even this is perhaps a reflection of the amount of entrepreneurship in this country—that because we so often lead in high technology software as opposed to hardware in areas like video and computers, the pirates have made London the centre of world operations and this is now very big business. A former Scotland Yard detective chief superintendent, Mr. Percy Brown, who I believe is now employed jointly by the 11 major film studios to lead their squads in combating piracy—it is gratifying to know that there are still 11 major studios, although it might he more accurate to describe some of them simply as studios—said recently: London happens to be at the centre of this illegal industry"— which, I repeat, is growing extremely fast— not least because Britain has the fastest growing video market in the world. One can see the link between this type of illegal activity and the misfortune that has befallen legitimate, respectable retailers of video products and audio cassettes. There is a profits slump in the industry. It is possible that too many people were encouraged to go into it, but they realise that the economic price of more than £30 for the original creative label video cassette cannot compete with the far cheaper prices of the pirates. Thus, neither the original creators nor the wholesalers or retailers can survive economically.

This problem has even begun to affect the hardware market. Although the number of machines now sold is substantial and growing fast, the real return has not merely diminished to a very small amount with price wars but in many cases has turned into colossal losses. A recent example was the audio-video retail firm, Sonic Sound in Tottenham Court Road—it probably has more shops in that street than any other such company—which is now in the hands of the receiver appointed by Barclays Bank.

Other factors contributing to the situation are the worldwide hegemony of the English language and the very wide acceptance of British television standards. It is ironic and distressing to see how the high quality and good reputation of British television and film has produced its own fallout in the development of this illicit and illegal industry.

The Bill is very important and it is vital that the House should support it. Many figures are bandied about on the extent of video piracy and I shall not add to them. However, the figure is rapidly moving towards the total cited for the United States of America of about £500 million. That figure may not yet have been reached, but we shall rapidly reach it unless something is done. How are the investigators, who try to track down pirates, doing? The picture is mixed. There is, perhaps, greater optimism about their activities than before, but the position is extremely difficult and it would be much better to have proper legislation that provides controls ab initio instead of having to use vigilante squads—I use that phrase in the respectable sense—to deal with crimes.

On 11 June my hon. Friend the Member for Howden (Sir P. Bryan) mentioned the need to consider the stricter criminal penalties that the United States of America has introduced for counterfeiting sound records, tapes and motion pictures. Under the new American law I understand that sound recording and motion picture pirating and counterfeiting offenders—including, interestingly enough, first-time offenders—face maximum felony penalties of up to five years' imprisonment, or fines of up to $¼ million. Even that fine is modest when compared with the colossal sums that will be generated by such illegal activities unless they are dealt with sharply. Indeed, although America is bigger both in its size, market and number of consumers, there is, as far as we can tell, less prima facie video piracy than in the United Kingdom. Ultimately, people should be made aware that by buying or renting a pirate tape they are an accessory to theft, to an infringement of the copyright holder's legitimate rights and are acting contrary to basic human justice.

Therefore, it is esential that we should make the public more aware of the problem. I endorse the appeal made by other hon. Members that the public should scrutinise tapes carefully. That might produce a slightly cynical reaction because every consumer will want to check only the price, subject matter and material. However, if we are continually to introduce consumer protection laws, consumers must bear some responsibility for ensuring that they are not aiding and abetting an unfair and illegal trade. If they decide to remain apathetic and indifferent to that moral argument and to the criminal implications, there will not be any high-quality, original, creative tapes or films, because the genuine people will have gone out of business.

Mr. Michael Winner wrote a very good letter in The Times on 18 March 1982. He referred to the development in America of such illegal activity and rightly pointed out that prosecutions in Britain were hampered by the 1956 Act, as yet unamended, which provided penalties of between only 40 shillings and £50. In his third paragraph, he states: Since cinema managers have reported being offered £4,000 to 'lend' films to pirates overnight, even private actions for damages are insignificant in relation to the problem. I understand the highest award in this case is £12,000 damages and £8,000 costs. At the beginning of the letter he says that his latest film, "Death Wish II"—I do not know what the subject matter is but it is a rather disturbing title, although it comes from a distinguished producer—has the dubious distinction of being the fastest ever available on the underground market. He goes on to say: Not only are illegal video tapes sold all over England at this moment, but I also understand that it"— that is "Death Wish II"— has been playing in pubs in Dublin for six weeks, and is available via a roundsman in Hastings on a door-to-door basis". I understand that this has not already been quoted in the debate. I am glad to learn that. There is always a risk of this happening when one comes into a debate at a late stage.

I should like to establish the distinction—notwithstanding my remarks about members of the public as consumers being watchful and taking seriously their own responsibilities—between what might be called absolutely private video recordings, if that is a tenable concept that can be held up to proper scrutiny and explanation, and illegal pirate video recording where more than one item is reproduced.

I refer to paragraph 22 of the Green Paper of July 1981. This is a problem area that needs to be tackled although it is easy for me to say that rather than to produce a solution. The paragraph states: No doubt recording practice is determined by the machines on the market. Those recorders which are currently available can do no more than record television broadcasts and play back recordings on television. They do not therefore represent a threat to the producers of pre-recorded video-cassettes as they cannot copy these products (except when they are broadcast). There will also be no threat to the owners of rights in video-discs when these come on the market as the machines for playing these will have no recording capacity That is true. It may be that the future will bring much cheaper tapes and inexpensive machines which will enable copying, in the home, of commercial pre-recorded tapes and video-discs (for example, video analogues of the music centre which provides facilities for taping audio-discs). For the present, however, the Government is not convinced that video recording for private purposes harms the interests of broadcasters, producers of programmes, film producers or any other rights owners involved in video production. I would welcome the Minister's reaction to that important paragraph. On the face of things, it is right and acceptable. The ordinary domestic consumer or user of this machine and the tapes should be reassured officially. None the less, the question arises of the uneasy dividing line in the future, if piracy is allowed to flourish, between the genuine domestic consumer using a recording once for private family purposes where no money changes hands and the person who decides to allow in friends, first of all free, but who then decides to charge. Instead of entertaining people in the sitting room, he might then decide to use the village hall in order to attract more people and charge each of them 50p. It is possible to see that innocent and upright people would engage in this practice believing that it was legitimate.

Mr. Brinton

In quoting from the Green Paper, my hon. Friend said that a private individual with a video cassette recorder could record only once off transmission. But all that he has to do to become a small businessman is to get another video recorder. That is the difficulty.

Mr. Dykes

I am grateful to my hon. Friend for making that point. I have seen, in a wholly respectable and legitimate company, a room full of recorders. When these are used for legal purposes, there is no criticism. When they are not, the situation becomes disturbing. I believe that the Bill will deter this sort of development. There will be the need to build more legislation on top of this measure.

Mr. Proctor

My hon. Friend mentioned the hypothetical situation of a private householder first inviting visitors into his home to watch a video performance, then perhaps charging them and then perhaps moving to the village hall. If a charge is made for admission to what would be a cinematograph exhibition, it would be caught by the licensing provisions under the Cinematograph (Amendment) Bill dealt with earlier today.

Mr. Dykes

That was another well-timed intervention, which has helped the House.

The video pirates have been allowed to run rampant for far too long. The Bill will not stop their hideous piracy, but it will at least give manufacturers and copyright holders greater unequivocal protection by providing for stiffer penalties on prosecution.

1.25 pm
The Under-Secretary of State for Trade (Mr. Iain Sproat)

I am particularity glad of the opportunity to discuss this important subject. My hon. Friend the Member for Howden (Sir P. Bryan) initiated a debate last month which helped to alert the public and the House to a fast-developing situation.

I begin by paying a warm tribute to my hon. Friend the Member for Uxbridge (Mr. Shersby) who has fought for his Bill tooth and nail over the past few months. Many parliamentary procedural problems had to be overcome, and it is right that the House, the public and those in the film and television industries should be told of the tremendous amount of work that my hon. Friend has done to get the Bill through.

My hon. Friend's early-day motion and that of Labour Members demonstrated the support in the House for a measure of this nature, and the Department is grateful to have that bipartisan approach, led by my hon. Friend the Member for Uxbridge.

The Department and the Government share the concern expressed today and in last month's debate about the extraordinary and commercially dangerous situation in which we find ourselves. The £100 million that has been mentioned as the level of illegitimate turnover is an enormous sum, but even that may be an underestimate. The Times mentioned a world market in illicit video cassettes of £500 million.

I do not know whether we should take pride and pleasure or shame and displeasure at the fact that we show such extraordinary small business initiative that we command 20 per cent. of the illicit market. I wish only that the drive and enterprise devoted to illegitimate cassette sales were devoted to more legitimate matters. The figures of £100 million and £500 million are startling, and it is estimated that probably more than 75 per cent. of video cassettes on the market are illicit. Even without any other evidence, those figures underline the need for urgent action against this growing criminal market.

If I have time I shall refer to the speeches of all hon. Members who have spoken and the different points that they made. My hon. Friend the Member for Eye (Mr. Gummer) is not allowed to speak in the House, but he has been most vociferous to me outside on the need to do something about this problem. I pay tribute to him, because he has been badgering me on behalf of his constituents to do something about the subject covered by the Bill.

My hon. Friend the Member for Uxbridge rightly began his speech by saying how easy it is to produce films illicitly. We all know how difficult it is to catch the projectionist who takes out a reel of film one evening and returns it the next day.

My hon. Friend the Member for Basildon (Mr. Proctor) asked for the statistics relating to police successes in these matters. I shall try to find out and then write to him. As the law stands, it is extremely difficult for the police to do anything. I hope that the Bill will make it easier for them.

My hon. Friend the Member for Basildon referred to the "trifling punishment" involved—a point made by other hon. Members on both sides of the House. I do not disguise the fact that I wish that so great and growing an industry could be dealt with by punishment that fitted the crime rather better. I should have been in favour of doing that in the Bill if it had been possible. As my hon. Friend the Member for Uxbridge knows from the many discussions we have had, we pursued ways in which that might be done. However, we felt that it would he better to take this modest step forward rather than to take no step at all, or a step that might be blocked. Private Members' Bills are susceptible to blocking, as the hon. Member for Brent, South (Mr. Pavitt) knows well, and he has my sympathy. That is why we have not gone as far as many of my hon. Friends would have liked. It is certainly our intention to bring in fuller legislation on all copyright matters when we have the opportunity.

My hon. Friend the Member for Howden asked what the timetable was for the Green Paper. The deadline for response has been set at 31 August this year. Later this year the European Commission is expected to publish a memorandum setting out its ideas for action leading towards ultimate harmonisation of copyright law throughout the Community. It is not possible to predict when comprehensive copyright reform can be carried out. I assure the House that we wish to do it as fast as we can.

Sir Paul Bryan

With the best will in the world, that could not take place within three years, could it?

Mr. Sproat

I do not want to put a date on it. The House will proceed as fast as it can. I imagine that in principle we shall have the support of both sides of the House, although no doubt there will be differences of detail. I know that the Opposition see a need for proper reform in these matters.

Mr. John Fraser

The penalties are being increased in other legislation. Will the Under-Secretary consider as an immediate short-term measure, the penalty of forfeiture of the equipment as well as fining? Motor vehicles used in the commission of drug offences can be forfeited. It might add to the deterrent effect of a fine.

Mr. Sproat

That is an interesting idea. If illicit video cassettes are discovered, they are removed and destroyed or given to the legitimate holder of the copyright. He then legitimises what was once illicitly produced.

The film industry is tremendously important. Many hon. Members will have been lucky enough to see "Chariots of Fire", which was a splendid but not isolated example of what the industry can do. It is a wonderful industry. I am determined to back it up as strongly as I can. I pay tribute to its aesthetic excellence, of which the hon. Member for Norwood (Mr. Fraser) spoke. It also makes a tremendous contribution to our balance of payments.

The other day my hon. Friend the Member for Howden mentioned the legislation passed by President Reagan. After listening to his vivid oratory, almost the first thing I did when I left the Chamber was to get hold of a copy of that legislation. We are studying it to see what we can learn.

The Bill must be seen in a wider context. Video piracy is an important criminal activity which should be stamped out. That is the business of the Bill. But we must fix not only on video pirates. The time has come for the Government and the House to look at the whole cinema industry. The legislation goes back to the 1927 statute, when A1 Jolson appeared in the first talking film "The Jazz Singer". It does not take proper account of the arrival of cable, satellite, video and television. We would be well advised to consider the area as a whole. I intend shortly to consult my colleagues in the Home Office and the Department of Education and Science to see whether we can consider all the aspects together and put fresh proposals before the House.

Mr. Michael Colvin (Bristol, North-West)

Is my hon. Friend suggesting that the Bill might include the categorisation of films? Cinematograph films are categorised as U, A, AA, and X, but there is no such classification in video. Retailers have no idea whether they are breaking the law.

Mr. Sproat

Such issues would be considered in the wide-ranging review.

We should also look closely at the increase in the portrayal of violence on video cassettes, which are freely available to the public and thus to children. I shall consult my hon. Friends in the Home Office as to how we can control portrayal of violence on video, which must worry every parent in the land.

Mr. Proctor

I welcome what my hon. Friend said about the wide-ranging review, but can he assure me that that is not an attempt to put off important decisions and that a time limit will be set? Earlier, I referred to the wide-ranging review on cinema safety regulations that ran for seven years. I hope that that is not the length of time contemplated.

Mr. Sproat

We are not. When I wake up each morning I am grateful to find that I still have my job. I assure my hon. Friend that I wish during my tenure in office to complete everything that I undertake. The review will not be an excuse for putting off. It will be as snappy as I can make it, but a balance has to be struck between speed and thoroughness.

I welcome the support of the hon. Member for Norwood. I have taken up his point about violence on video. It is important. It does not arise directly from the Bill, except in the sense that pirates of other people's property might be involved in the making of violent video cassettes. The hon. Gentleman said that a source of revenue for the legitimate film industry was being destroyed. I agree 100 per cent.

I am grateful to my hon. Friend the Member for Basildon for quoting my letter. He said that it was excellent. I am grateful to him for that crumb of praise. In the letter I explained some of the reasons why we object to the spread of piracy. One of the reasons is that it reduces revenue for the legitimate industry.

The hon. Member for Norwood also asked whether we could introduce a code to make it easier for the public to know whether they were buying, or retailers to know whether they were stocking, pirate films. I shall examine that possibility. One of the troubles is that some of the pirate films look so much like the real thing. I have heard that sometimes the manufacturers of legitimate cassettes cannot tell the difference between their own and pirated cassettes. We shall see what can be done, but the problem is difficult.

My hon. Friend the Member for Howden invited us to hurry further down the road. I shall go as fast as is reasonable in the circumstances. My hon. Friend also talked of the laughable penalties. I have said something about that and given the timetable for action after the Government's Green Paper on copyright.

The hon. Member for Keighley (Mr. Cryer) spoke of the enormous budgets involved in some films. He said that the new James Bond film budget was about £10 million. We are talking about enormous investment by the legitimate industry. We must do everything that we can to ensure that such legitimate investment and the creation of jobs are not put at risk by the comparative ease and cheapness of rendering the exercise nugatory.

The hon. Member for Keighley talked about the seed-corn of new production. That puts the matter neatly. It covers one of the arguments that I advanced in my letter. The hon. Gentleman also talked about violent and pornographic cassettes. I agree that because the problem is difficult, it does not mean that we should not try to come to grips with it. I shall consult my colleagues to see what can be done.

My hon. Friend the Member for Gravesend (Mr. Brinton) rightly said that many areas of the film, video and cable industries should be pulled together. That is what I want to do. I want to go back to the 1927 Act and examine the morass and maze of levies and quotas. The time has come to examine and rationalise the legislation.

My hon. Friend said that some video pirates may not know that they are doing wrong. Perhaps there are some innocents about. My hon. Friend mentioned the village hall. However, in general, the people involved are criminals and should be treated as such. The duty of the House and of the police is to stamp out this crime. We must not underestimate it. One hears stories about the Mafia being involved and how drug rings are funded by sales of violent video. The trade impinges on a nasty area. That is why the Government are determined to take it seriously.

My hon. Friend also spoke of the closing down of cinemas. This, again, is a matter which I take very seriously. I have received delegations from cinema owners on the subject. That is one of the reasons why we want to push ahead as fast as possible.

My hon. Friend the Member for Ilford, South (Mr. Thorne) talked about small businesses and small businesses. He was quite right. I wish that the enterprise and initiative shown in the production of some of these illicit videos were shown in other areas. If so, the loss to the Chancellor of the Exchequer, to which my hon. Friend referred, might not be so great. We are talking of a loss of tax based on a £200 million turnover. That is a substantial loss that has to be made up by other taxpayers. My hon. Friend was right to draw attention to that aspect.

My hon. Friend the Member for Basildon said that we were discussing films a good deal in the House today. This underlines the importance that the House of Commons now attaches to the film industry. Certainly I attach great importance to it. The fact that today we have had two debates on the film industry, answered by different Ministers from different Departments, shows the difficulty of dealing with the industry as a whole and the need to rationalise the way in which the Government approach the film, video, cable, satellite and television industries.

My hon. Friend pointed out that we were discussing a kind of stealing. It is theft. As my hon. Friend the Member for Harrow, East (Mr. Dykes) reminded me, Who steals my purse steals trash". Here we are talking not just about honour, which was the point of that quotation, but about the theft of creative ability, of enterprise and of all those commodities that any Government should do their very best to foster. It is theft of a particularly despicable kind. I have told my hon. Friend that I shall try to let him have some statistics about the success of the police and the difficulties under which currently they are operating.

In a powerful speech, my hon. Friend the Member for Harrow, East emphasised the criminal nature of the activities, how fast they were growing and how far they were spreading. We must not underestimate the problem. London has become the world centre of these criminal activities.

I thank all hon. Members who have contributed to the debate. I am grateful for their support for the Bill—support which the Government also give. I thank my hon. Friend the Member for Uxbridge for his sterling energy in getting the Bill, I hope, through the House. I wish the measure and its consequences the very best.

Question put and agreed to.

Bill accordingly read the Third time and passed, without amendment.

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