Collective licensing bodies face £50,000 fine for non-compliant code

Out-Law News | 17 Sep 2013 | 9:49 am | 1 min. read

The Government could fine collective licensing bodies up to £50,000 if they fail to implement a compliant code of practice governing their activities, according to plans outlined by the Intellectual Property Office (IPO).

The IPO has published new draft regulations which would, if introduced, provide the Government with a power to intervene if it identifies problems with self-regulatory voluntary codes of practice collecting societies have been asked to implement.

Last year the IPO published "minimum standards" (6-page / 368KB PDF) that it expects to see adhered to in collecting societies' voluntary codes. The standards stretch across areas including staff conduct, information and transparency, complaints handling and collecting societies' obligations to licensees.

Now it has set out new draft regulations under which it will have the power to impose "effective, dissuasive and proportionate" sanctions on copyright licensing bodies that fail to adhere to those requirements. Sanctions include a potential £50,000 fine.

"If intervention through the reserve power becomes necessary, it will be based on robust evidence," the IPO said in its consultation paper. "The ability to impose a range of sanctions is a discretionary power reserved for the more serious and persistent breaches. Such sanctions are necessary to protect the interests of collecting society members and users, as well as non-members where the collecting society operates an extended collective licensing (ECL) scheme."

Under the proposed Copyright (Regulation of relevant licensing bodies) Regulations (36-page / 300KB PDF), the Business Secretary would also have the power to appoint a "suitably qualified" 'code reviewer' to assess and report on an industry's own code of practice and an 'ombudsman' to "investigate and determine complaints about compliance with codes".

The IPO said that the power to appoint a reviewer could be exercised where industry codes have no existing reviewer or where "a systemic problem" has been identified with the industry-appointed reviewer that makes it "untenable" for them to continue in the position. The power to appoint an ombudsman could be exercised where there is a "wholesale failure" of the industry's ombudsman arrangements, it said.

The Enterprise and Regulatory Reform Act, introduced into law earlier this year, provides the Government with the power to introduce new statutory codes of conduct for collecting societies. However, the Intellectual Property Office (IPO) has said that it would only use the "backstop" powers if voluntary, self-regulatory codes put in place by collecting societies themselves do not solve concerns about the existing regime.

The IPO said it would update the rules it has proposed if required to do so as a result of EU law developments. A draft Directive on collective management of copyright and on the licensing of music works was published last year.