Advice & Guidance

Tuesday 31 August 2021

ALPSP Copyright Committee responds to IPO Consultation on exhaustion of IP rights.

31 August 2021

This document lays out the ALPSP Copyright Committee’s response to the IPO consultation on the exhaustion of intellectual property (IP) rights.

The IPO launched this consultation on June 7th, running it for 7 weeks and asking for businesses, representative organisations, creators, and consumers for their contribution.

ALPSP is the international trade association which supports and represents organisations that publish scholarly and professional content.  It has nearly 300 member organisations across 30 countries.  Its vision is to foster a culture that will strengthen and advance academic and scholarly communications in all its forms.  It does this by:

  • Leading and enabling knowledge-sharing across its membership and the wider community.
  • Fostering the creation of international connections through networking and collaboration.
  •  Informing and influencing policy and decision-making, advocating for society, not-for-profit and community-led publishing; and
  •  Promoting inclusivity and diversity, removing barriers to participation and increasing transparency.

This response will focus on the potential effects of a change to copyright exhaustion on the publishing industry generally, and on ALPSP members in specific, and we will argue that the UK government should maintain the status quo and retain the UK+ approach.  We recognise that the scope of the consultation excludes purely digital goods.  We have responded to the questions included in the Consultation Response Form which affect the publishing industry directly.  If it would be helpful, the ALPSP Copyright Committee would be happy to discuss our responses in more detail at any time.

SECTION A

Parallel trade to and from the UK

Q1: Is there parallel trade[1] in your sector?

Yes.  The UK publishing industry is a net exporter of printed materials.  UK authored works are in high demand throughout the world, and ALPSP members are actively engaged in disseminating their publications internationally.   Publishers and authors are able to protect their considerable investment in these works by relying on copyright legislation, including exclusive territorial distribution rights.   The UK’s gold standard copyright regime allows publishers of all sizes to rely on copyright protection to safeguard international distribution and licensing activities.

Territorial rights are crucial for UK publishers and ALPSP members: international editions; custom publications for particular territories and local market support via price differentiations are just a few of the means our industry engages with to distribute UK content worldwide.

Territorial rights encourage diversity and competition in publishing, allowing smaller publishers to license territorial rights suitable for their local market and stimulating tailored content development.

ALPSP members have indicated that the ability to export their publications is of key importance to maintaining and protecting their businesses, with many smaller publishers building their future strategies on the ability to distribute and sell their work internationally.  As many of these smaller publishers are not supported by fully staffed legal departments, it is of utmost importance to ALPSP members that they be able to rely upon the automatic grant of copyright protection to engage in cross-border transactions.

Q1a: If so, how do parallel imports from the EEA impact on your organisation in terms of (a) choice, (b) availability of supply and (c) competition in your marketplace?

ALPSP understands from its members that the current UK+ approach is managing parallel imports, and that there is no detrimental impact on availability or consumer choice.  Both the UK and the EEA are closely linked in terms of consumer sophistication and understanding of the choice between an edition marketed for the EEA versus an edition specific to the UK.  The EEA and the UK also maintain closely parallel copyright regimes, thereby providing ALPSP members with confidence and certainty that when works enter the EEA market they will receive robust copyright protection and illicit reproduction, or distribution may be remedied by law.

Q3: In your business, how do you exert control over supply chains?

Authors and publishers use copyright to protect their interests to all extents possible.  Contracts will often play a key role in establishing licensing arrangements, but these contracts will often rely on copyright rules to educate on what needs to be included in the contract’s terms.  Copyright protection is often the only route publishers may turn to in order to enforce their digital rights and combat piracy.  As this protection is attached to all works automatically, it is particularly invaluable to ALPSP’s smaller and not for profit members.

Q4: For your business or organisation, how do right holders become aware and seek to stop their products being parallel imported from outside the EEA without permission?

As copyright is a national right, where copyright is licensed to third parties, such as overseas publishers, they are obliged to adhere to contractual requirements, in particular in terms of the territories in which they are entitled to publish.  To manage the materials made available lawfully, publishers monitor online marketplaces and websites.  Take-down notices are often issued, with varying success in practice.  Under the current regime, it is also at least possible to use copyright to prevent any unlawful materials entering the market and impacting negatively on the legitimate publisher and author.

Copyright protection is also well understood internationally, and the UK is a global leader in advocating for a robust copyright regime.  UK publishers partner with a variety of businesses, institutions, and educational establishments globally to underscore the importance of copyright protection for all works, and to educate non rightsholders on what rights copyright protects.  Our members are concerned that any weakening of that protection could undermine our common objective in maintaining a strong copyright regime.

Prices

Q5: Are there international price differentials for goods in your sector?  If yes, what are the factors that influence differences in prices between countries?

Yes.  Pricing will largely depend on the market in which materials are sold, including consumer preference, levels of income and supply costs.

UK’s current exhaustion regime

Q6: Are you or your business/organisation aware of the change to the UK’s exhaustion regime that came into effect on 1 January 2021 following the end of the transition period?

Yes, although, from comments made by ALPSP members, the change does not seem to have had a major impact on their businesses.  This regime allows goods to be imported from the EU, as permitted prior to 1 January 2021, and since this represented no real difference in ways of doing business, ALPSP members have not reported a meaningful impact on their publishing practices.

Q7: What are the costs and benefits of the current regime to your organisation?  For example, in terms of choice and availability of suppliers, prices paid and regulatory standards.

From feedback received from ALPSP members, it appears that the UK+ regime is working well and that the current approach recognises the importance of copyright to the UK publishing industry Maintaining the current approach has obvious advantages in terms of cost savings for both businesses and government and surety to the market and has proven to be successful in terms of encouraging growth.  For that reason, the ALPSP Copyright Committee would be strongly in favour of maintaining the UK+ system going forward.

Assessment of options for the UK’s future exhaustion regime

Q9: If the government was able to change from the current unilateral regional regime (UK+ regime), would your business or organisation prefer a model which either allowed parallel imports from anywhere in the world (without the rights holder’s permission) or prohibited parallel imports into the UK (unless the rights holder’s permission is obtained)?  Please outline the regime your business or organisation would prefer and explain the benefits, costs of change and risks of that change.

If the government decides to move away from the current UK+ regime, the ALPSP Copyright Committee would be in favour of a national exhaustion regime which would allow copyright owners to control the international distribution of their works.  We feel that this recognises the substantial investment placed in works, both by the author and the UK publishing industry generally.

Q10: Of the 4 options that the government is assessing, which exhaustion regime would you be most opposed to for your business or organisation?  Please explain the reasons and set out the costs to your business or organisation and risks of that change.

ALPSP members are fundamentally opposed to an international exhaustion regime.  We feel that it would likely have a chilling effect on publishers’ willingness to offer their works at lower price points or invest in developing emerging markets.  Such a change could also have a detrimental impact on the strength of the UK publishing industry internationally.  We are concerned that it could lead to an increase in infringement of copyright, placing even more burden on customs authorities at the point of entry to the country having to identify which goods are genuine and which are infringements.

The UK copyright system is often referred to as the gold standard for copyright regimes.  This gold standard is what supports our authors and publishers and encourages investment in our industry.  It is our fear that, if the UK were to adopt international exhaustion, the high standard of copyright protection UK authors currently receive will be diluted, leading to a weakening of our copyright system overall.

Adopting international exhaustion would put an undue burden on UK authors as their work would be freely exported globally, without the copyright owners’ agreement, and those copies could then be exported back into the UK without the consent of the copyright owner.  This puts UK authors at a distinct disadvantage, especially considering the unique value UK literary content has on the global market.

Q11: Is there clear and verifiable evidence in favour of different treatment for specific sectors, goods or IP rights to the UK economy?

If an international exhaustion regime were to be adopted, the ALPSP Copyright Committee would support a carve-out for the publishing sector, as has happened already in countries like Canada.  However, we believe this would also add unnecessary complexity to the publishing industry, especially in light of publication components that may receive protection outside of that which is granted to literary works.  Despite the legal and financial uncertainties that a fragmented exhaustion approach would entail, territorial copyright protection is of such key importance to ALPSP members that a carve out for literary works would be vital to protect the interests of UK authors and publishers from the unauthorised importation of low-priced copies and unauthorised reproduction of their works abroad.

Q12: What new activities would your business have to undertake if the government changed the current exhaustion regime?  What would be the costs and benefits of such activities?

If the current exhaustion regime were to change, UK publishers would face immediate restrictions on their ability to licence overseas editions and prevent cheaper products from entering the UK market.  This, in turn, would have a massively detrimental impact on all aspects of the UK publishing industry, in particular on smaller societies, which make up a large proportion of ALPSP members.

ALPSP members may also find increased burdens in their ability to effectively compete against larger commercial publishers who may be better equipped to protect their existing distribution agreements if there were to be a change in the exhaustion regime.  Many ALPSP members worry that they would be faced with difficult decisions about whether to cease international licensing or distribution of their content in order to protect their UK market, and many may choose to disengage from international business transactions over such concerns.

Overall impact on consumers, society and the economy

Q13:  Please outline any other issues that the government should consider when deciding on what exhaustion regime to implement, including economic, trade, consumer, or societal impacts.

The UK publishing industry is recognised globally as an important and financially lucrative market.  The UK has a vibrant publishing sector covering a diverse range of publication types and has built upon a strong history of excellence.  UK publishers and authors enjoy global influence due to the international importance of the English language, and their ability to effectively disseminate UK publications is a key reason events such as the London Book Fair remain hugely influential.  Any change in the exhaustion regime, with the associated risks to revenue streams and production, would likely have a detrimental impact on publishers’ ability to maintain the UK’s position as a lead exporter of literary works.

The UK’s rich publishing history has allowed for both small and large publishers to compete together and permits a wide range of diverse viewpoints to be expressed.  International exhaustion would put the UK publishing industry in jeopardy and therefore its plurality of opinions from being successfully exported.

Implementation of any change

Q14: If the government were to change its exhaustion regime, what factors would affect the amount of time your business or organisation would need to implement a change?  This may include but is not limited to changes to supply chains, contracts, product development, manufacturing processes or investment decisions.  Please provide information to support your comments.

If the IP exhaustion regime were to change, publishers would need considerable time to adapt their businesses to manage the impact this would have to their business.  This would involve re-assessing business methods, models, legal relationships, and agreements; re-examining supply chains and distribution arrangements; and, even, potentially, major changes such as relocation costs, or potential downsizing due to loss of business opportunities.

Q15: If the government were to change its exhaustion regime, what length of time would your business or organisation need to implement the change (for example, 1 year or 3 years)?  Please provide information to support your answer.

If the UK were to change to the international regime, ALPSP would support a long transitional phase of at least five years.

Legal

Q16: Do you have any views on the government’s assessment of UK legislation and international treaties that are relevant to the UK’s choice and implementation of an exhaustion regime?

The UK is an internationally important source of copyright protected materials and continues to play a major role in trade with the European Union and the rest of the world.  The UK also has obligations in terms of international law under the WTO, the Trade-Related Aspects Intellectual Property Rights Agreement (TRIPS), and certain standards must be looked at and applied in protecting IP rights and deciding on the appropriate regime.

We agree with the UK’s assessment that the concept of exhaustion has built up over many decades and is supported by European law.  This strong history, combined with the importance of retaining, a harmonious copyright system with the EEA, argues against any change to the current regime.

Q17:  Do you have any views on the government’s assessment that the Northern Ireland Protocol will mean that the regime ultimately selected by the UK government will need to allow parallel imports into Northern Ireland from the Republic of Ireland and other EEA countries?

Whilst we appreciate that this is a complex area, the UK-EU Trade and Cooperation Agreement refers to both the EU and UK being permitted to decide on their future exhaustion regime and there is no mention of Northern Ireland being an exception within that.  It is also the ALPSP Copyright Committee’s understanding, from statements made by the EU Commission, that the EU would permit legislation preventing parallel trade from Northern Ireland to the EU.  Given that position, we consider that a UK national exhaustion regime could be possible.

From figures made available by the UK Publishing Association, the publishing industry is worth £6.4bn to the UK economy, with £3.7bn (or 58%) of that revenue being exports.  That equates to 70,000 UK jobs and supports hundreds of thousands of authors.  The UK is the biggest exporter of books in the world and helps share British culture, education, ideas, and values with billions of readers and learners across the globe.

There are many reasons publishers create works specific to regional markets, including local editions, price differentials that recognise variances in global economies, and compliance with relevant regulations on content.  Copyright exhaustion allows publishers to provide markets with appropriate choice and availability of works, as well as allowing them to compete with both domestic and international businesses.

Those who advocate for international exhaustion may argue that it increases competition by providing consumers with greater choice.  However, international exhaustion would likely have a chilling effect on publishers’ willingness to offer their works at lower price points, or invest in developing emerging markets, and could impose unmanageable financial pressures on smaller publishers in particular, potentially forcing some publishers to close.  This could ultimately have a chilling effect on consumer choice, and severely impact the UK’s publishing industry’s strength internationally.

We thank the IPO for running this consultation in order to understand the importance of copyright publishers and the ALPSP Copyright Committee would welcome any opportunity to discuss further with the IPO the impact of a potential change in the UK's exhaustion regime on our members.

With Kind Regards 

Wayne Sime
Chief Executive
The Association of Learned & Professional Society Publishers (ALPSP)
Egale 1, 80 St Albans Road, Watford, Hertfordshire WD17 1DL



 

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