AS AN AMENDMENT IN LIEU OF COMMONS AMENDMENTS Nos. 21 to 24 (Hansard, 2 November 1988)

§ Lord Young of Graffham

My Lords, I beg to move that the House do disagree with the Commons in their Amendments Nos. 21 to 24., but propose Amendment No. 21A in lieu thereof. In speaking to this, I shall speak also to Amendments Nos. 21B, 25, 58 to 65 inclusive, 113, 114, 121, 122, 128, 138, 139, 141, 173, 173A, 182, 304, 305, 393, 395 and finally 401. This large group is concerned with various aspects of the second of the acts restricted by copyright—the issue of copies to the public. It includes the rental right.

Clause 18 defines the second of the acts restricted by copyright—the issue of copies to the public. As subsection (2) makes clear, this means the act of first putting the copies in question into circulation. This is obviously something that could take place anywhere in the world, but equally clearly the copyright owner only has a right under our law in respect of copies first put into circulation in the United Kingdom.

Subsection (2) as presently drafted. makes it clear that the restricted act does not relate to distribution after the first issue has taken place but there is some ambiguity in the present drafting in respect of imported copies. Where importation precedes first issue, as where copies are imported in bulk by the publisher, that import should not prevent the first issue being a restricted act. But where copies of a work are first issued abroad and then imported into the United Kingdom there is no infringement under 215 Clause 18. The importation may constitute secondary infringement under Clauses 24 and 27(3) because the copies were made without licence covering the United Kingdom, but that is a different matter. There is no primary infringement under Clause 18. Amendment No. 21A will remove any doubts on that score.

I turn now to the rental right. Your Lordships may recall that the Bill as introduced contained no provision for a rental right, an omission which we were urged to rectify from all sides of the House. This we duly did and provision for a rental right was introduced into the Bill at the Report stage. These provisions have been further refined in another place in several respects.

The first point concerns who is to enjoy the right. Amendment No. 21B in the name of the noble Lord, Lord Williams, seeks to extend the right of the owners of copyright in works included in sound recordings, films and computer programs, but I fear that I cannot accept it. I know that authors are disappointed that the new rental right has not been extended to them. This is a matter which has been debated fully in this House and in another place. To give all those with a copyright interest in, say, a film would result in the video rental shop needing a multiplicity of licences and we think this is unduly bureaucratic. Authors will benefit from the exercise of the rental right by producers. First, when the right is used to stop rental of CDs by copy shops, the author benefits. Secondly, he can negotiate a share of rental income when he agrees to his work being included in a record or in a film.

Amendment No. 128 helps in this respect. It provides that in settling the charges that should be paid for a rental licence, the Copyright Tribunal must take into account any payment the copyright owners of films, sound recordings and computer programs have to make in respect of works incorporated therein. The amendment was foreshadowed by my noble friend Lord Beaverbrook and means that the authors and composers will be in the same position with regard to exploitation through rental as performers are in respect of susequent exploitation of recordings of their performances.

I turn now to the nature of the right. As the Bill left your Lordships' House, it only covered the hiring of copies for money or money's worth. This is unduly restricted and does not cover all the circumstances in which the copyright works in question can be exploited by what is, in effect, rental. A good example is a hotel which keeps a library of videos for the use of its guests. If no additional charge is made for this service, it would not fall within the restricted act and so the copyright owner has no claim for remuneration. But of course the hotel is paid for the service in its basic room charge. We do not think that businesses should be able to make copies available to the public and avoid copyright liability by including the cost of a quasi-rental operation in the charge for the amenities or services they provide.

Amendment No. 173 is central in this respect. It defines "rental" for the purpose of Part I. The word "hiring" is to be replaced by "rental" in all relevant 216 parts of the Bill, since rental is now a broader concept than hiring. This has the incidental advantage that the Bill now uses the term "rental" to describe what copyright circles always refer to as the rental right.

The second charge is perhaps the most significant and concerns Clause 63, which was introduced because of our concern that the new right might be used to frustrate the natural workings of the market. Clause 63 gave the copyright owner a short period of exclusivity to protect him from competition from rental during the period when sales were likely to be at their highest and copying of rented works most prevalent, but ensured that rental could not be stopped indefinitely since after that initial period rental was to be permitted, subject to payment of a royalty.

The proposals in Clause 63 provoked a lot of criticism, much of it ill-informed. However we were persuaded that there were some genuine objections which we needed to address and we came to the view that a degree of flexibility was needed. Instead of taking away the exclusive right for all products, as Clause 63 does at present, we should do this only where the right is being used, or is likely to be used, in an undesirable way.

The way in which this is to be achieved is to be found in Amendments Nos. 58, 60 and 61. They will result in a full exclusive rental right lasting the duration of copyright. However, the Secretary of State will have the power to order that particular categories of products or persons should be licensed for rental purposes.

We do not expect to have to activate the powers in respect of the ordinary commercial rental of sound recordings, videos and computer programs in the form that these products take today. We do not anticipate that the owners of rights in films would do anything to disrupt the present smooth operation of the video rental market. On the other hand, I would expect the owners of rights in sound recordings and computer programs to prevent any rental which was likely to lead to loss in sales through copying; but that is an entirely legitimate use of the right. However, the powers will be available in reserve, for use if the rental right is used by any of these rights owners in a way which is not acceptable. Your Lordships will also note that as a result of Amendments Nos. 59, 63, 64 and 138 the charge for a licence under Clause 63 is no longer confined to royalty payment. For example, a lump sum payment might be agreed.

Finally, as to the position of public libraries, the Bill as it left your Lordships' House would allow public libraries to avoid the rental right by lending sound and video recordings and computer software without charge. Copyright owners would be adversely affected if public libraries were exempt from the rental right. They would get no royalty from the materials lent by public libraries. They might also find their royalties from other sources falling as people were attracted to use the free public library service.

It is Government policy to encourage public libraries to generate new income for growth by providing a wider range of charged services. Most libraries already charge for lending out such non- 217 traditional material as sound recordings, and would therefore be subject to the rental right in any event if they continued to do so. We do not wish to allow libraries to avoid making payments to copyright owners by ceasing to charge for these materials; and Amendments Nos. 393, 395 and 401 therefore ensure that public libraries will be subject to the rental right, whether or not they make a charge.

I note that Amendment No. 173A in the name of the noble Lord, Lord Williams, is intended to achieve the same result that I have already explained is achieved by Commons Amendments Nos. 393, 395 and 401. It is therefore unnecessary and I would resist it for this reason. My Lords, I beg to move.