DACS (The Design and Artists Copyright Society) – Written Evidence (JTN0022)

Executive Summary

DACS is grateful for the opportunity to take part in this inquiry on the Department for International Trade (DIT)’s strategic approach to UK-Japan trade negotiations, published on 13th May 2020.

DACS considers that the strategy does not sufficiently protect the economic interests of visual artists, who are an essential part of the UK’s prosperous creative industries and art market. The creative industries contribute £111.7 billion[1] to the economy – more than the automotive, aerospace, life sciences and oil and gas industries combined. The UK’s art market is the second in the world and was worth £10.2 billion[2] in 2019 alone.

Visual artists rely on the UK’s strong intellectual property (IP) framework to generate needed income. The IP framework in Japan does not produce similar financial returns for visual artists. Securing the ongoing value of the visual arts sector is vital, especially as the visual arts attract investment and tourism, and contribute to cultural education in addition to their economic success.

DIT should seek a trade agreement with Japan that upholds the UK’s IP regime, otherwise the UK would in effect give Japan free access to our highly valuable IP industries.

This paper calls on DIT to do the following:

• Commit to request Japan adopts Artist’s Resale Right;
• Ensure that the UK’s copyright framework is robustly preserved and that there are no concessions made to accept wider copyright exceptions or a change in copyright term;
• Ensure that negotiations with Japan on AI and digital services protect the UK copyright framework and promote the beneficial system of copyright licensing for AI developers that fairly remunerates creators.

About DACS

DACS is the UK’s flagship collective rights management organisation for visual artists, representing over 100,000 artists worldwide. DACS manages copyright and Artist’s Resale Right on behalf of visual artists and champions their sustained contribution to the creative economy. DACS is the UK’s leading distributor of money to visual artists in the UK.

Artist’s Resale Right and the Art Market

1. In the UK, artists benefit from the Artist’s Resale Right (ARR) – legislation that provides artists with a royalty when their copyright-protected works resell through art market professionals, like galleries, auction houses and dealers. It provides a revenue stream that is already enjoyed by writers and musicians who receive royalties on reuses of their works.  DACS, as administrator of the right, has paid over £90 million in ARR royalties to artists since the ARR law came into force in the UK in 2006. With its extension to deceased artists in 2012, the law in the UK now operates on a similar level across European Member States, which allows UK artists to benefit from the resales of their works taking place in the EU.

2. There is no ARR or equivalent law in Japan at present, despite the fact that Japan has a strong art market that has grown continuously for the past four years[3]. Japan is home a high number of billionaires who have exceptional buying-power for contemporary art. The Japanese collector, Yusaka Maezawa, who acquires mostly contemporary Western art works, has been known to spend over $110 billion USD on art works in one day[4]. However, sales of British artworks in Japan will not result in an ARR payment for the artist and therefore no royalties flow back to the UK economy.  

3. A beneficial aspect of ARR is creating transparency in opaque markets. The art market in the UK is not underpinned by a professional body and is generally unregulated, which has led to forgeries and fakes circulating in the art market and problems with money laundering. ARR requires art market professionals to report sales of works, which creates visibility to artists or their estates on whether the works are verified as authentic.

4. Online art sales pose a significant threat to ARR payments being made to artists due to the fact that ARR does not apply in all countries. This is a particular problem in countries which do not have ARR but also have emerging or growing art markets that present a new opportunity for UK-based online sellers. For example, if a UK-based auction house or gallery hosted their virtual salesroom in Japan to attract Japan’s wealthy buyers, ARR would not apply and therefore no ARR royalties will go back to UK artists on any sales of their works.

5. Online art sales globally were worth £3.68 billion in 2018 alone and this market is significantly increasing, especially since the Covid-19 pandemic has limited the ability to carry out traditional physical sales events. The most effective route to close this potential gap to circumvent the law is to ensure ARR is adopted in as many countries as possible so that jurisdiction cannot prevent ARR liability arising.

6. DIT’s strategy paper acknowledged the public call for ARR in response to an open consultation. However, there is no mention of ARR in the strategy paper and therefore no commitment to ask for adoption of ARR during negotiations. 

7. DIT should commit to request that Japan adopts ARR.

UK Copyright Framework

8. The UK has a gold-standard IP framework that has enabled the highly successful creative industries to develop and prosper. The UK’s IP regime is one of the best developed in the world. It is ranked by the Taylor Wessing Global IP Index as third in the world[5], while the 2017 US Chamber of Commerce International IP Index[6] ranks the UK in second place. This IP framework should be maintained and should not amended by way of a free trade agreement with Japan.

9. DACS is concerned that the USA will urge Japan to adopt an US-style IP framework, which gives weaker protection to creators. US IP law enshrines the notion of ‘safe harbour’ that allows tech giants to avoid liability for online copyright infringements, preventing creators from getting value for their works being used online. For exceptions to copyright, the UK has a fair and balanced framework of ‘fair dealing’ for specific uses. The US principle of ‘fair use’ on the other hand is a catch-all term that creates a defence that is unpredictable and prone to misuse, resulting in costly court cases. Case law in the USA has failed to bring any clarity to the scope of the ‘fair use’ defence as each case is determined on balancing various factors of the defence and the precise facts of the case, which leads to overall confusion over its application in day-to-day scenarios[7].

10.                     Recent trade deals negotiated by the USA include provisions securing aspects of the US copyright framework. The US-Canada-Mexico (USMCA) free trade agreement imports safe harbour provisions into the copyright framework[8] in Canada and Mexico for the benefit of US internet companies. This will make it harder for Canadian and Mexican creators to assert their copyright and be fairly remunerated for online uses. After the USMCA was agreed, the US Copyright Office published a report that recommended to congress that s.512 DMCA needs “fine-tuning”[9], demonstrating general acknowledgement that the US system has problems.

11.                     There is a strong risk that a US-style copyright framework is becoming the international norm. The US were close to entering the Trans-Pacific Partnership with Japan and other Pacific countries which would have also exported safe harbour laws into Japanese law. DIT must not allow the UK to adopt US-style IP framework through the back door. Implementing Japanese or US-style copyright principles would hinder the UK’s flexibility in introducing legislation or other measures, such as on Online Harms, that help to tackle IP infringements along with other illegal or unethical online activity.

12.                     As the UK increasingly adopts online-delivered content, from virtual gallery tours to live-streaming productions, it is more urgent than ever to ensure that visual creators’ rights are protected and preserved.

13.                    DIT must ensure that the UK’s copyright framework is robustly preserved and that there are no concessions made to accept safe harbour or fair use policies.

Digital trade and services – effects on copyright law

14.                     Through research and development partnerships, DACS has become a thought-leader in technology, from blockchain to artificial intelligence (AI). DACS is already harnessing the potential of blockchain and AI in day-to-day applications and innovative uses for helping licensing artistic works to customers. DACS welcomes the development of AI applications in the UK and its global trade to increase the availability of visual works in a way that generates equitable remuneration to artists.

15.                     DIT’s strategy paper states that the UK can make progress “in areas such as the free flow of data, which will support emerging fields such as Artificial Intelligence” (see p.5) and whilst DACS welcomes this, caution must be taken not to erode existing rights. Globally-led conversations on AI, including the World Intellectual Property Office’s recent issues paper, have misunderstood the technological abilities of AI and have been too quick to consider widening copyright exceptions to help AI development. There is no need for copyright exceptions to be widened or changed, or for the UK’s vital copyright framework to adapt for AI to develop.

16.                     Existing UK copyright exceptions cover a broad range of activities which are sufficient for various stakeholders to use copyright-protected works in a balanced way. AI developers can make use of relevant copyright exceptions as much as any other stakeholder can under their national legislation. As such, DACS considers that AI developers have a range of exceptions already available to them and there is no need for these to be expanded further, which would ultimately be to the detriment of rightsholders who are trying to make a living from the exploitation of their IP. If there is a lack of understanding of copyright in the AI-related industry, this could be dealt with through targeted copyright education and awareness campaigns.

17.                     Additionally, licensing opportunities are increasingly more flexible and more efficient, especially as licensors begin to adopt certain technologies themselves. DACS has carried out research and development into using tools like blockchain to create more transparency in the art market[10], and these tools can also be used for creating efficient, large scale licensing opportunities.

18.                    DIT must ensure that negotiations with Japan on AI and digital services protect the UK copyright framework and promote the beneficial system of copyright licensing for AI developers that fairly remunerates creators.

28 August 2020