Stuck in the middle with (section) 52

IPO Consultation on the transitional arrangements for the repeal of Section 52 of the CDPA

Background

There can be considerable overlap between the laws of copyright, registered designs and design rights, in that all three may be relevant to the same article. An unintended consequence of this was that a rights holder might seek to claim an extended period of protection by way of copyright, when it would otherwise be limited under design right to a protection period of up to 25 years.

Section 52 of the Copyright Designs and Patent Act 1988 (CDPA) was therefore introduced to limit the duration of copyright in artistic works that have been industrially exploited with the copyright owner’s consent to 25 years (i.e. the same maximum protection available for designs).

Over the years, several designers have lobbied to have this exception removed to ensure that any artistic work they produce can enjoy the full term of copyright protection (author's life plus 70 years). In 2012, they were successful in their efforts and section 52 was to be repealed under the Enterprise and Regulatory Reform Act 2013.

Recognising the potential impact on businesses (for example, those who produce and sell reproductions of classis furniture), the government also provided for a transitional period of five years until April 2020 in order to prepare for the changes. The Commencement (Enterprise and Regulatory Reform Act 2013 (Commencement No.8 and Saving Provisions)) Order 2015 (the Commencement Order) was passed to give effect to the repeal and transitional period.

However recent developments have resulted in confusion. A claim for judicial review was brought challenging the transitional period on the grounds it is incompatible with EU law which resulted in the government's decision to reconsider the issues raised. At the end of July 2015, the Intellectual Property Office (IPO) announced it was revoking the Commencement Order and putting the repeal on hold.  However, this is not the end of the story.

The Government remains keen to revoke section 52 but with different transitional arrangements. Therefore an entirely new set of proposals for implementation has been drafted and a further consultation held in respect of these proposals.

The Consultation

The consultation on potential new transitional provisions ran from 28 October 2015 until 23 December 2015 and sought to consider four issues:

1. The transitional period before the repeal of section 52 takes effect;
2. The depletion period required for existing stock;
3. Provision of copyright protection for works made before 1 June 1957; and
4. Compulsory licensing of works where copyright is revived.

Transitional Period

The government originally decided that five years was an appropriate transitional period but is now of the view that a different approach is needed and that a greater balance needs to be struck between the needs of the rights holders - who are keen to obtain protection as soon as possible - and the businesses who need time to adjust.

The consultation paper (produced by the IPO) makes reference to the Court of Justice of the European case of Flos, which held that it may be lawful to have a transitional period when introducing copyright for artistic design for the full term of protection, provided that the principle of proportionality is taken into account.

The original five year period would not meet the requirement of avoiding delay in establishing full copyright protection. Conversely a very short period of transition (such as a month) would be unfair to businesses. The Government has therefore reviewed the position to try and seek a middle ground.

Its proposed solution is to provide for a transition period of six months from the publication of the consultation (which began on 28 October 2015). Therefore, from 28 April 2016, the repeal will come into effect and businesses and individuals will no longer be able to rely on section 52.

Depletion period for existing stock

Initially the Government, under the original Commencement Order, intended that any relevant stock imported or produced up to the date of repeal would remain lawful if dealt with after that date. However that approach was criticised as it meant rights holders would be unable to control copies made of their works by way of granting licences.   

The Government has now proposed to allow for an additional six month depletion period (in effect, a "sell off") following the date of the repeal – ie up until 28 October 2016 - in order to provide for certainty in licensing works after the repeal of section 52. It should be noted however, that the depletion period will be allowed only for goods produced or acquired under a contract entered into before the publication date and time of the consultation (ie before 28 October 2015). The reasoning behind this is that it will protect those businesses who produced or acquired affected goods before the Government's announcement of its proposal for a six-month transitional period, whilst preventing a flurry in the purchase of affected products by businesses with a view to selling them off quickly.

If adopted, the repeal of section 52 will mean that all relevant stock will either need to have an appropriate licence from the rights holder or have been depleted by 28 October 2016.

Provision of copyright protection for works made before 1 June 1957

The CDPA contains provisions in Paragraph 6 of Schedule 1 which deny copyright for artistic works made before 1 June 1957 where the work could also have been a registered design and was used as a model or pattern to be multiplied by an industrial process.

In order to provide clarity for rights holders, and to ensure equality of copyright protection for artistic works capable of qualifying as designs and other artistic works, the Government proposes to amend this provision to exclude articles protected by copyright in the EU as at 1 July 1995.  

Compulsory licensing of works where copyright is revived

This is an area in which the Government has not previously considered action necessary.  However the proposals now include protection for rights holders of revived copyright by allowing them to control the making of copies of their work.  It is suggested that this would be achieved by repealing Regulation 24 of the Duration of Copyright and Rights in Performance Regulations 1995, which imposes an obligation on the rights holder of a revived copyright work to grant a licence.

Comments

Whilst there is a need to ensure rights holders are able to benefit from the new regulations as soon as possible, it is also important that there is a balance struck with the potential effects on business.  When initially deciding the transitional period, the Government believed five years was necessary to allow businesses to adapt and find new revenue streams. The newly-proposed 6 month period has also attracted criticism that it does not give businesses enough time to prepare.

The new proposals are likely to have far reaching effects; affecting not only for manufacturers producing 3D goods but also businesses such as publishers and institutions such as museums. For example, a book filled with images which did not previously require consent to reproduce may instead require a licence for each individual image used of a design (on the basis that a 3D to 2D copy would be considered a replica).

With the final proposals for the repeal expected to be confirmed by the Government in spring this year, it is clear that the proposed timeframe is tight and that the outcomes of the consultation might necessarily include further tweaks in respect of implementation.  Even so, it is clear that businesses will have to react quickly to either clear their stock or negotiate relevant licences within the depletion period, in order to avoid being liable for infringement claims. Given the limited timescale, keeping up to date with developments is essential.