Launch of intellectual property enforcement strategy

Baroness Neville-Rolfe addresses the threat of illegal streaming services and set-top boxes at the launch of the intellectual property (IP) enforcement strategy.

Good morning, and welcome to the Department for Business. Today I am going to be talking about some of the challenges we are facing from the meteoric growth of illegal streaming services.

I am also going to discuss how we might work together to tackle this challenge head on, and that of course starts with you in this room.

But first, I want to talk about the wider enforcement landscape for intellectual property, the role of government, and to explain the framework that we have developed to guide our work over the coming years.

Intellectual property has been very important to the UK for a long time. We were at the forefront of developing patent rights. I understand that there is some evidence of a patent like system in ancient Greece, but in England, John Kempe and his company were granted letters patent in 1331. That’s nearly 200 years before Columbus reached America.

Similarly with the Statute of Anne in 1710, the UK effectively invented the concept of copyright. Now there are 170 states signed up to the Berne convention.

Again with trade marks, the first trade mark legislation was passed by the English parliament, in 1266.

And of course we have made good use of these intellectual property rights once they were brought into being. The UK has led the world in publishing. Only 7 fiction books have ever sold more than 100 million copies, and 5 of those were from British authors. And to be clear I’m not including the Bible, or the Quran in the fiction category – there’s a headline I don’t want to be reading tomorrow.

Again with music, there have only been 7 artists so far to sell over 250 million records – and 4 of them were from the UK.

And of course we have, and continue to be, at the forefront of technological innovation protected by patents. From steam engines, to televisions, to graphene, again the UK punches well above its weight, and we are investing in great initiatives like the Digital Catapult, to spur ever more innovation.

But of course I don’t need to tell you how central IP is to the UK. Most of you here in this room work in professions, or for companies that would not exist without IP rights, the licensing that takes place with those rights, and the investment that supports in content, in technology and in brands.

The problem we all face, is working out how we can ensure that these valuable IP rights are usable, and how we can ensure that their value is preserved in the face of relentless infringement on an enormous scale.

Professor Hargreaves stated it quite plainly in his 2010 report:

IP rights cannot succeed in their core economic function of incentivising innovation if rights are disregarded or are too expensive to enforce. Ineffective rights regimes are worse than no rights at all…

And that is where government comes in.

We often say that IP rights are private rights. In some cases the appropriate redress is through the civil courts, and rights holders can be left to get on with it. The problem is that when infringement is so widespread, and so damaging, that legitimate businesses are in danger of collapse, then that is no longer a private matter.

We are a government that stands right behind businesses, creators and innovators of all types. We cannot sit by while rights that have been developed over a long time to nurture innovation and encourage investment, are rendered useless. This is true whether it is caused by the deliberate behaviour of serious infringers, or by the unthinking actions of people who just don’t appreciate the harm that is caused by watching free streaming sites or buying bargain counterfeit goods.

In our manifesto we pledged to make Britain the best place in Europe to innovate, patent new ideas and set up and expand a business. We pledged to protect intellectual property by continuing to require internet service providers to block sites that carry large amounts of illegal content. And we have pledged to build on our voluntary anti-piracy projects to warn internet users when they are breaching copyright, and to work to ensure that search engines do not link to the worst offending sites.

To sum things up more broadly than these specific pledges, we are committed to ensuring that the bargain between creator and the IP system is honoured. There must be a framework which supports the effective and appropriate enforcement of all IP rights. That framework has to be accessible, and it must keep pace with new models and channels of infringement.

I am taking the opportunity of this seminar today to launch our new strategy, ‘Protecting creativity, supporting innovation: IP enforcement 2020’. This document lays out the areas that we see as the most pressing priorities, and some of the work that we see as most necessary to make sure that IP enforcement works.

In some ways we start from a favourable position. The UK has done well in recent years, being ranked highly for its IP system, and its enforcement environment in particular. But we must work tirelessly to keep ahead of the game.

The first piece of this puzzle, and the reason we have organised this seminar today, is to ensure that we know our enemy. Good evidence, and clear intelligence, about the harm caused by infringement and the business models that facilitate and profit from it, are central to an effective response.

That is why I have asked the Intellectual Property Office to develop a robust methodology for measuring the harm caused by IP infringement. I have tasked them with developing a comprehensive scoreboard to be published annually, combining data on the prevalence of civil and criminal IP infringement with the outcomes of enforcement activity and the best available estimates of their impact.

This means better reporting in the criminal justice system, better reporting of court cases and a deeper understanding of consumer behaviours and emerging trends. The IPO has been supporting industry and enforcement agencies with its IP Crime Intelligence Hub, and has built links into the police and trading standards to share that intelligence.

We must also stem the tide of infringing material online. The Prime Minister has announced a universal service obligation for broadband of 10 megabytes for every household by 2020. That will be amazing for consumers and legitimate online businesses, but an open door for pirates to push out yet more infringing content.

We need to make it easier for consumers to recognise legitimate content, and to understand the harm caused by piracy. We also need to find a new model for notice and takedown which does not require rights holders to send millions of notices only to see the same content reposted as soon as it is taken down.

We have had some successes here, with the creation of the Infringing Website List now beginning to starve pirate sites of the advertising money they need to survive, but we must push this approach out further, to other intermediaries and to other territories.

Of course despite this focus on exciting new technologies and the online world we cannot afford to take our eyes off the physical world either. Counterfeiting remains a huge problem - causing harm for brand owners in lost sales and harming consumers with substandard and sometimes dangerous goods.

We will continue to provide a dedicated intelligence resource to help enforcement agencies tackle counterfeiting. We will continue to tell anyone who will listen about the deep rooted and well proven links between IP crime and other criminal behaviour. We will champion the use of Proceeds of Crime seizures in IP investigations. Again – we don’t just want to follow the money, we want to take it back from the criminals who have stolen it.

Now I spoke earlier about the idea that IP is a private right, and I hope I explained why I believe government has a central role to play in this fight. But I also believe that the most effective remedies come from helping people to help themselves.

Our strategy also commits us to look at the entirety of the legal framework, to ensure that whatever type of infringement, and whatever the IP right, creators and innovators are able to access recourse that is effective, and proportionate.

We have announced our intention to toughen penalties for online copyright infringement. We have also called on the EU as part of their work on the digital single market to protect the system of website blocking injunctions we have developed in the UK, and to ensure those same injunctions are available in other member states.

But we are also looking at new areas where we might need to create new legal tools to tackle new modes of infringement.

We will look for example at whether or not new legislation is needed to respond to the role of fulfilment houses, an odd term I know, and drop shippers in the distribution of counterfeit goods.

Following today’s discussions we will look at the legislation around set-top boxes, and whether we have enough effective remedies to tackle their misuse.

We will also look across the framework, to ensure that there are effective sanctions, when there is infringement to be tackled.

Set-top boxes capable of accessing infringing broadcasts were initially an issue in business premises especially of pubs taking the opportunity to screen football matches without a valid subscription.

But more recently, as we will hear later, these set-top boxes have entered the mainstream consumer market. And I can see the appeal. If the only factor guiding a purchase decision is price, then a set-top box which allows you to watch countless premium channels for a modest one off payment is an attractive option.

But perhaps this also gives us an insight into the solution. We must work to educate consumers as to what exactly their bargain entails. If they knew that by buying these boxes and watching infringing streams they were directly damaging the future of their favourite programmes they might think twice.

This is not an easy message to get across. But in truth this is the tragedy of the commons writ large. Consumers understand that deliberate infringement has consequences, but many don’t think they themselves really bear any responsibility. That is the mind-set we have to change.

Working with businesses to promote diverse sources of legal content will help to ensure that ‘it’s easier to infringe’ or ‘I can’t get it elsewhere’ are no longer valid excuses for infringement.

And educating consumers directly as to the effect their choices have, following the mould of the ‘Get it Right from a Genuine Site’ campaign, will help us build momentum for behaviour change.

IP is by its nature international. We will continue to engage closely with Europe in the light of the current digital single market programme.

But looking further afield a 2014 UKTI survey found that 1 in 4 UK businesses were deterred from entering an overseas market due to the risk of IP theft.

While some of this can be written off to unfamiliarity, language barriers, different legal systems and so on, there is clearly a real challenge for us here as well.

That is why our strategy also lays out our plans to build on the IP attaché network, to build influence in key UK markets and provide training and practical support to emerging markets, and to strengthen our links with established trading partners.

We will continue to share best practice with law enforcement and judiciary overseas, and we will continue to engage operationally where infringing activity crosses borders.

As I have mentioned, the issue of set-top boxes is a perfect example of a modern IP enforcement challenge.

Set-top boxes and IPTV constitute a disruptive technology. Both the boxes, and the online services which they access have legitimate uses, but they have been subverted on a massive scale.

The business of satellite and cable broadcasting is a multi-billion pound industry in Europe and brings a wide range of cultural, sporting, educational and leisure programmes to an immense audience.

Broadcast content is an area where the UK has a strong position. The reach of content like the English Premier League is truly global and there is hardly a corner of the earth that does not know about Manchester United and other British teams. I understand Leicester City led to chanting in the streets in Thailand and is being wooed for a Harvard Case Study.

Now broadcasting has come a long way since John Logie-Baird demonstrated the first working TV. The days of a monolithic central broadcaster producing all of their own content and beaming it out into the world with a big transmission tower are long gone.

Broadcasters and content owners today support a massive network of jobs and industry. In addition the infrastructure of the delivery companies creates employment and revenue that benefits the community and governments as well as shareholders.

Examples of this ecosystem include the domestic manufacturing industry that makes the receiver kit – decoders, the software industry that provides the systems and the security around them, the call centres that handle consumer issues…the list goes on.

The value of protecting the delivery of pay to view broadcasts was and has been recognised in the extension of legislation to protect the decoders necessary to receive the signal, allowing subscription services to generate income. It is already illegal to circumvent the security of such devices.

However as technology has developed and broadband speeds have increased, it is now entirely possible to receive programmes in high quality over the internet avoiding the use of decoders entirely.

Quite simply the original broadcast is captured at illegal data centres that can be located anywhere and is then re-transmitted as streamed signals over the internet.

Set-top boxes, which I must stress have perfectly legitimate uses, are then supplied pre-loaded with apps that can either be used to subscribe to an illegal site or get content for free whilst the site operator generates income from advertising.

These devices have quickly become widely available. In the first instance they appeared in pubs and clubs and the industry has invested huge time and effort in challenging them, However, they are now so prevalent that individual consumers are buying them in their droves, and getting free access to copyright material from any broadcaster, anywhere in the world.

The threat this poses to the industry is huge and already we have seen specialist providers such as one London-based small and medium-sized enterprises (SME) serving the ex-pat Chinese community being put out of business, with the loss of 50 jobs in London.

But this is not an easy problem to crack. The industry in the UK has done everything to ensure that where action can be taken it is. And we are confident that data centres streaming content illegally are very rare in the UK. But the internet knows no borders, and services based in more tolerant regimes overseas are having a direct impact upon our broadcasters, and our content creators.

We also have the fact that the devices themselves are not illegal – as I have mentioned they have legitimate uses and we cannot forget that.

Because it is the use they are put to, rather than the devices themselves which are the problem – it is unlikely that they can be successfully regulated like de-coders. In any case as smart TVs become more widely used set-top boxes will not be needed, as the TV itself will just need the right apps to access illegal content.

But this does not mean we are powerless. Officials in the UK and Europe have sought to influence our Chinese colleagues, so that they consider how they might restrict their manufacture and supply. I myself have visited China as a minister and have discussed exactly these sort of issues.

We are also acting at home, to prove to the world that we are willing to clean up our own back yard as well and tackle the demand side of the equation. Recently arrests have been made under conspiracy to defraud legislation, targeting those criminals who commercially order and supply set-top boxes with the intention that they will be used to illegally receive IPTV.

We think this is an effective approach and our work has been a major help to Hong Kong Customs in developing their own ability to prosecute traders in set-top boxes using similar legislation.

But despite these small glimmers of light, it is clear that we need some new thinking in this area. The satellite and cable industries and broadcasters continue to invest in better security and enforcement, but it is also clear that the criminals are serious and this sort of organised crime generates huge profits.

It is no coincidence that data centres for illegal streaming services tend to be concentrated in places like Russia and the Ukraine and are linked closely to dedicated fraud sites.

Now this is the part of the speech where I would love to be able to propose a solution, or to announce some targeted new law which would make everything better, but we are not there yet. That is why we have asked you here today. We must first gather the evidence and intelligence we need. Only then can we look at the legislative framework, at the role of education and awareness raising, and at how we can facilitate closer work within the industries affected.

There is no single device or clever trick which solve these sort of problems, but as our strategy lays out, we need instead to develop and maintain an entire toolbox of interventions and remedies.

I very much look forward to hearing more from you all on this very topical subject, and I hope that by the end of today we have moved at least a little forwards in developing a few new tools for our collective toolbox.