Written evidence submission from Motion Picture Association (MPA) (DTD0030)

1 March 2021

Motion Picture Association (MPA) response to the House of Commons International Trade Select Committee’s Digital Trade and Data inquiry

About the MPA

1. The MPA welcomes the opportunity to respond to the Committee’s Digital Trade and Data inquiry. As a major part of the audiovisual (AV) sector in the UK, the MPA represents companies[1] that produce and distribute some of the highest quality and most popular creative content. Technological innovation lies at the heart of film and high-end television production, from set to screen. The UK boasts some of the world’s most advanced facilities and expertise for digital production and post-production, as well as world-class digital distribution services, from cinemas to a growing wealth of online services, including those of MPA members. Ensuring strong rules for digital trade that protect continued investment in creative content and consumers access to it is of paramount importance for MPA members.

What opportunities does digital trade present for UK businesses?

2. The UK film and television industry has embraced all aspects of digital technology to produce and distribute movies and television content. The industry has helped drive a technological revolution through the development and commercialisation of digital production, editing, and distribution; digital 3-D and IMAX formats; digital cinema; and Blu-ray DVD technology. Digital motion picture technology and products enable creators to produce special-effects and cinematic experiences impossible just a decade ago. Digital technology lowers the costs of replication and distribution, especially for smaller independent film makers. However, this also means that, in order to maintain the high growth and success of the UK’s film and television industry, it must be underpinned by strong rules and practices for digital trade.

3. Globally, audiovisual content represents a significant export opportunity for UK businesses. As highlighted in MPA’s 2019 THEME report[2], without accounting for pay television subscriptions the combined theatrical and home/mobile entertainment sector worldwide reach 101.0 billion USD in 2019 , an eight percent increase on 2018. Since 2015, box office receipts have increased eight percent, whilst the home/mobile entertainment sector, i.e. content released digitally and on disc, has increased 62 percent, due to digital.

What are the main barriers faced by UK businesses engaging in digital trade?

4. The UK should ensure that any future trade agreements establish disciplines that recognise the integral role of AV content in the online ecosystem. The UK should be ambitious for expansion of AV exports and tackling barriers to trade. Local market access restrictions not only have the effect of stifling business development and inward investment, but also risk exacerbating digital piracy – perhaps the single-most damaging barrier to digital trade currently faced by the film and television industry.

5. The current size and scope of digital piracy, and its impact on the digital marketplace, is indisputably substantial. Rampant piracy through sites and services based outside the UK is highly disruptive of legitimate trade.  It not only impedes the evolution of legitimate channels for distribution, but also threatens to permanently damage or displace existing and authorised distribution channels, which face wholly unfair competition from infringing business models that use unauthorised and unpaid for content, pay no taxes and ignore applicable laws and regulations. Along with other market distortions, digital piracy impedes the commercial licensing of film and television content. It is therefore critical that any modern trade agreement includes high anti-piracy standards and commitments that address, in particular, the problem of digital piracy via third-country sites and services to enable the production and dissemination of legitimate creative content.

How does the regulation of digital trade impact consumers?

6. MPA aims to expand the legitimate market and protect our member companies’ content as it flows to consumers through a variety of traditional and new distribution channels. There are now at least 450 legitimate online platforms around the world, allowing global audiences to enjoy creative entertainment with ever greater flexibility, including on a wide range of devices, with choice as to viewing format and across a multitude of price points. Consumer demand for high-quality content is driving this global digital trade, which helps support jobs in the UK and millions more worldwide.

7. However, as countries increasingly propose and implement barriers to digitally enabled services and the proliferation of illegal and infringing content online continues, investment in, and the availability of, MPA member content through legitimate channels is placed in jeopardy. Open, free, and reciprocal digital trade with strong protection of IP rights is key to our industry’s ability to compete globally and to continue offering billions of consumers access to content of their choice.

8. In addition, it is important that the UK retain the ability to address online harms. Consumer trust is central to the success of a healthy digital ecosystem. As such, the UK Government should oppose any obligations under a UK-US FTA that would provide broad liability shields for online intermediaries[3]. Such a provision would unduly limit UK policy options for any future online harms framework and should be resisted.

What approach(es) should the UK take to negotiating digital and data provisions – including those concerning the free flow of data, data localisation, and intellectual property – in its future trade agreements?

Intellectual property

9. MPA member companies are keen to work with the UK Government to maintain this country’s status as a world-leading hub for film and television[4]. The UK’s success has been achieved to date through a highly supportive domestic environment for content production that includes a world-leading copyright framework.  Effective copyright protection and enforcement is critical to the creation of an environment conducive to investment and growth and is particularly relevant to digital trade policy. The UK Government should therefore include commitments reflecting high standards of copyright protection and enforcement in all its future trade agreements.

10. The most important of these standards today include the following:

1. provisions that account for technological changes, including full implementation of the WIPO Copyright Treaty and the WIPO Performances and Phonogram Treaty (jointly referred to as the "Internet Treaties"[5]), which set out international norms that aim to prevent unauthorised access to, and use of, creative works on the Internet or other digital networks.     
2. provisions that reflect the global consensus on minimum standards of protection, including, for example, provisions setting out the duration of protection;
3. provisions that enshrine the concept that limitations and exceptions to copyright are confined to those that are consistent with the longstanding “3-step test”; 
4. provisions affording effective legal protection of technological measures elected to be used by copyright owners to control access to and copying of their works (known as Technical Protection Measures), such as, for example,  the technological measures used to control access to direct-to-consumer services operated by MPA members or licensees;
5. comprehensive obligations regarding copyright enforcement with meaningful criminal penalties and civil remedies (including, for example, statutory damages, “secondary infringement” liability, criminal liability for aiding and abetting, criminal remedies for illegal recording of films in theatres, and remedies addressing pay-TV piracy and signal theft);
6. enforcement measures addressing online infringement that mandate deterrent civil and criminal remedies; provide legal incentives for online service providers to cooperate with right holders; and ensure stay-down of pirated content in full respect of relevant rights and the rule of law.

11. No-fault injunctive relief, which has been successfully used in the UK and multiple UK trading partners to reduce online copyright infringement, is an extremely effective tool for dealing with this problem. It ensures that an appropriate process is in place to require intermediaries to take reasonable steps to disable access or services to copyright infringing websites and services that are hosted outside of their country. It has become a common practice in the UK for rightholders to use Section 97A of the Copyright Design and Patents Act to secure court orders requiring internet intermediaries to withdraw services from structurally infringing sites. In 2020 the MPA testified before the US Senate on our experience with this remedy in the UK and around the world, observing that “no-fault injunctive relief helps to curtail illegal conduct and creates space for the cultivation of legitimate commerce.[6]” It is vital, therefore, that UK trade agreements ensure the preservation of the existing benefits of the no-fault injunctive relief regime in the UK.

12. Newer challenges to IP online, such as the rise in the use of illicit streaming devices (ISDs), must also be considered.  As explained in the USTR Notorious Markets List in 2017: “ISD piracy is the combination of media boxes, set-top boxes, or other devices with piracy applications (apps) that allow users to stream, download, or otherwise access unauthorised content from the Internet. ISDs may be ‘fully loaded’ at the point of sale with an open-source media player, apps, and add-ons configured to access unlicensed content via cyberlockers and streaming websites. Alternatively, the devices may be combined with add-ons after purchase to achieve the same objective” [7].

13. Although the UK is beginning to take action against these types of devices, a sufficiently robust copyright framework, which not only facilitates effective enforcement against established online piracy threats like popular streaming piracy websites, but which also can be flexible enough to adapt to, and effectively address, new challenges, should be a requirement of any future UK trade agreement. 

Free flow of data and data localisation

14. Establishing disciplines that recognise the integral role of AV content in the online ecosystem, as discussed in the above IP section, is critically important to facilitating legitimate digital trade. Also important are provisions to ensure the free flow of data between markets and to prevent localisation barriers. Despite the clear benefits of encouraging digital trade, some countries – including China, India, Indonesia and Vietnam - are adopting data localisation requirements and cross-border data flow restrictions that provide significant trade barriers.

15. The UK Government should work to ensure the open cross-border flow of the information and data that drive the digital economy and prohibit government requirements for in-country data storage as a condition for operating in the market. MPA would recommend that any exceptions to digital trade provisions, including data flows, therefore be narrowly tailored and consistent with GATS Article 14.  Language reflecting this approach can be found in the United States-Mexico-Canada Agreement[8] under Article 19.11.

What approach should the UK take towards renewing the WTO’s moratorium on customs duties on electronic transmissions?

16. MPA firmly supports the renewal of the WTO’s moratorium on customs duties on electronic transmission. This long-standing pillar of global digital trade allows information and content flows to remain duty-free, allowing the film and television industry to reach consumers in innovative ways.

What objectives should the UK have when negotiating digital and data provisions during its accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)?

17. MPA is supportive of the UK Government’s ambition to seek new trade agreements following the UK’s exit from the European Union and are keen to increase trade in the Asia-Pacific region, where we see significant growth opportunities for the audiovisual sector. 

18. However, whilst rapid accession to the multilateral CPTPP may bring immediate benefits to some industries through a reduction in tariffs, MPA members rely heavily on a robust IP framework to drive growth and economic benefits. With this in mind, we share the concerns of other IP-rich industries in the UK that a rush to join the CPTPP may result in the embrace of IP standards significantly lower than those present in UK law and lead to a significant missed opportunity.

19. The tangible commodities exported by many CPTPP member countries can be traded physically in the absence of prohibitive tariffs. By contrast, high-value UK digital exports, such as those produced by MPA members, only exist for trade purposes thanks to a combination of the copyright legal framework and legal protection for digital security technology used to secure online distribution (known as Technical Protection Measures or TPMs).

20. In the digital environment, content owners rely on TPMs to prevent piracy, e.g. by allowing them to prevent the copying of a digital work with a password.  The CPTPP provisions (Article 18.68 and Article 18.69) that support these protections by ensuring signatory countries have legislation in place to prevent the circumvention of TPMs are currently suspended, leading to a lack of protection in critical, high-growth markets such as Vietnam and Malaysia. Without such protections, UK AV exports become infinitely reproducible and lose their economic value. Protection of these UK works is therefore not something to be treated as a secondary “nice-to-have” priority: it is fundamental to the export potential of the UK’s world-leading audiovisual sector.

21. The opportunity to swap comprehensive market access for such IP chapter improvements will only come once in a generation.  Should broad market access for tangible goods exports from high-growth territories, such as Vietnam and Malaysia, be granted through the CPTPP, the UK’s only leverage to obtain IP improvements analogous with current UK standards would disappear. A strong IP exporting nation such as the UK must ensure that raising IP standards to UK-analogous levels is part of the benefit of the bargain in any comprehensive trade agreement, including the CPTPP.

For further information regarding this consultation response, please contact Motion Picture Association UK representatives

Caroline D’Silva

Nigel Warner

March 2021