Written evidence submitted by the Alliance for Intellectual Property (OSB0016)

Introduction

The Alliance for Intellectual Property is a unique association of 20 organisations representing IP rich businesses and creators – sectors that continue to grow and outperform the wider economy. Our members include representatives of the audio visual, music, toy and games, business software, sports rights, branded manufactured goods, publishing, retailing, image, art and design sectors. They share a collective interest in ensuring that Intellectual Property (IP) rights are valued in the UK and around the world and that legislative regimes exist that enable the value and contribution of those rights to be fully realised.

We are pleased to respond to the Joint Committee on the Draft Online Safety Bill’s call for views into the Government’s approach to tackling harmful online content.

We note that the Government has decided to specifically exclude Intellectual Property (IP) theft and harms that flow from it from the Online Safety Bill.  Since other illegal activities are not covered in the Draft Bill but have not been explicitly excluded in the same way, further explanation from Government is needed: firstly, to avoid sending out the message that harms generated by IP theft are not significant and, secondly, to explain how it intends to ensure that digital service providers in scope do more to reduce the significant levels of IP infringement that take place on, or are facilitated by, their platform and services.

We were encouraged by the recommendation in last year’s report from the Digital Markets Taskforce (8th December 2020) that, “The Government should strengthen powers to tackle unlawful or illegal activity or content on digital platforms which could result in economic detriment to consumers and businesses.”(G22, 13b). We ask that the Committee use its powers of scrutiny to ask Ministers what further steps, including legislative ones, they are planning to take in this regard.

The opportunity for the growth of IP rich industries

In 2018, the Government published its Creative Industries Sector Deal which aims to double Britain’s share of the global creative immersive content market by 2025.  By this time, the value of this market is expected to reach £30 billion.  The Sector Deal commits to a joint investment from government and industry of £150 million to help the country’s world-leading cultural and creative businesses thrive. Within this raft of initiatives are measures to improve IP protection, including the formation of three roundtables to discuss the challenges presented by: social media and user upload sites; online marketplaces; and digital advertising with internet intermediaries.  These voluntary measures, though welcome, have been extremely slow in coming to agreements and have no statutory underpinning.

We believe that intermediaries that provide internet services should take greater responsibility for their part in reducing IP infringement and that the UK’s regulatory framework should take the lead in delivering on that.  Tackling IP infringement is all the more crucial for IP rich industries, and those that work in them, which have been significantly impacted by the COVID-19 pandemic and are now facing unprecedented challenges.

The problem & potential solution

Tackling counterfeiting and piracy is crucial to delivering on the UK’s ambitions to grow our IP rich industries and protect the public.  There are a whole range of initiatives that are being deployed to achieve this aim including education campaigns, directing consumers to legitimate sites, growing the number of legal services that are available, civil action to block access to illicit services, and law enforcement activity to disrupt the criminals who run the illicit services.

We believe that reducing IP infringement has a direct correlation with enhancing trust and transparency.

One of the major challenges faced by IP owners in tackling infringement is the absence of reliable information on those who are making available counterfeit goods and pirated content on digital platforms.  Many IP owners also struggle to control the sale of goods which infringe territorial copyright.

To address this lack of transparency we believe all intermediaries that provide business infrastructure services, not limited to those within the scope of the Online Safety Bill, should have a greater responsibility to understand who their business customers are by implementing Know Your Business Customer regulations. 

Whilst an obligation on such service providers to make identification details accessible already exists in law, the current self-disclosure regime for operators of online services contained within Article 5 E-Commerce Directive (as transposed into UK law by the Electronic Commerce (EC Directive) Regulations 2002) is ill defined and has no enforcement regime.  This makes it very easy for illicit business operators to provide counterfeits and pirated content to the public – they can simply ignore the requirement to self-disclose their identity, and indeed they routinely do so with complete impunity. 

The Government must identify an appropriate legislative vehicle to fix this gap in the law.  Providing more robust rules and effective enforcement would fulfil the original intent of the self-disclosure scheme by ensuring that consumers and other businesses know who they are dealing with when they interact with online services.  It would also bring much broader benefits for building trust in digital markets and ensure fair competition for legitimate businesses, since knowledge of operator identity is essential to fighting a wide range of harms, such as scam websites and websites offering other types of illegal services that have nothing to do with IP.

It is important that all providers of critical business infrastructure take greater responsibility to ‘Know their Business Customers’, and have a duty to have verification protocols in place to ensure their business customers are engaged in legitimate business activities.  Where those business customers are found to be engaged in illicit activity, such as IP infringement, there should be a clear process in place to prevent that activity. Such a process could, at last, provide for meaningful consequences – in the form of loss of access to business-critical UK infrastructure (hosting, payments, etc.) – whenever illicit businesses choose to ignore the self-disclosure regime of the E-Commerce Directive.  It is notable that this issue is under active consideration in other jurisdictions, including the EU.

Regulatory structures

As we have found through the voluntary roundtables aimed at finding measures to deal with IP infringement, interventions and changes have been slow to emerge.  We would therefore welcome any new regulatory procedures that have speed, flexibility, clarity and legal certainty.  As new digital services emerge, so do new IP infringement challenges and being able to react quickly is vital.  Clarity and legal certainty is also important to ensure digital services know and understand their responsibilities.

Summary

Noting the Government’s decision to explicitly exclude IP infringement from the Draft Online Safety Bill, we would ask that Parliamentarians press the Government to explain what action it intends to take to promote digital service providers taking proactive steps to improve the responsibility they take for protecting consumers online and to implement effective ‘Know Your Business Customer’ obligations.

September 2021