Copyright

Case Note: Universities UK v Copyright Licensing Agency and Another

Jane Lambert
3 Jan 2002
This case first appeared on the Old Colony House website

Chapter VII of the Copyright Designs and Patents Act 1988  provides machinery for regulating licensing schemes, that is to say standard form licences offered by collecting societies or other organizations known as licensing bodies that negotiate and grant copyright licences to the public. Although such schemes benefit both authors and users of copyright works in that they avoid the need for extensive enquiries and negotiations for what may be small sums of money licensing bodies exert considerable leverage in the market which easily could be abused. To prevent or mitigate such abuse the Act permits users or their representatives to refer the terms on offer to a tribunal consisting of a legally qualified chairman and deputy chairmen and up to 8 ordinary members that is now known as the Copyright Tribunal.

The Issues
Since 1989 the Copyright Licensing Agency ("CLA"), (a joint venture of the Authors Lending and Collecting Society and the Publishing Licensing Society) and DACS (Design and Artists Copyright Society Ltd.) had licensed university teachers and students to make as many copies as they wished of whatever they wished to copy in return for an annual flat fee per student subject to two exceptions. The first exception was for course packs, that is to say, defined compilations of photocopied material to support courses of study. The reproduction of such packs required separate clearance through a procedure known as CLARCS ("Copyright Licensing Agency Rapid Clearance System"). The second were separate artistic works though it was common ground between the licensing bodies and the universities that such exclusion could not possibly cover illustrations integrated in text. The licensing bodies sought to increase their revenue by special fees for course packs and artistic works.

The issues before the tribunal were therefore:

	how much money should universities pay to authors for photocopying artistic and literary material by their staff and students;
	whether there should be a single scheme for all copying or a two-tier one in which an additional fee is due for course packs; and
	what was meant by the words "separate illustrations, diagrams and photographs" in the separate artistic works exception?

The Applicable Principles
S.135 of the 1988 Act requires the Copyright Tribunal to have regard to all relevant considerations not just those set out in s.129 to s.134 such as the need to avoid discrimination between licensees, the availability of published edition the proportion of the work to be copied and the nature of the use to which copies are likely to be put when considering references. The tribunal therefore reminded itself that the legislature had declined to provide a general exception from the copyright laws for education because there was a symbiotic relationship between educational institutions and publishers. It was in the interests of the former that there should be a healthy publishing industry but it was equally in the interests of publishers that universities should not be burdened unduly with restrictions on copying

Decision
The tribunal could see no justification for special treatment for course packs and removed their exclusion from the licensing scheme. They were expensive to administer, often inconvenient for university teachers and provided no overriding benefit for authors or publishers. Finding that the exclusion of artistic works could apply only to works on separate pages that are not essential to understanding accompanying text and that a distinction between illustrations integrated with text and illustrations on such separate pages was pointless in the classroom, the tribunal removed that exception as well. The flat fee per student previously negotiated by the parties was £3.25. As that was considerably higher than the flat fee per pupil charged to schools, the tribunal reduced it to £2.75. To this was added £1.20 to compensate for the removal of the course pack exception and a further 5p for the removal of the artistic works exception making a total of £4. The tribunal ordered that the new fee would increase in line with inflation as measured on the retail price index and the licence would run for 5 years from 1 August 2001. In a subsequent hearing, the tribunal found that the CLA had acted unreasonably in defending a separate rate for course packs and ordered it to pay 25% of the universities' costs with an interim payment of £100,000. A copy of the licence eventually settled by the parties and sealed by the tribunal may be obtained from the Patent Office website.

Comment
In its interim decision the tribunal expressed concern at the scale and costs of the proceedings before it. It subsequently transpired that the costs of the universities alone amounted to £800,000. As the tribunal observed, the whole purpose of the tribunal is to prevent licensing bodies from abusing their market power, anything that deters references to it will defeat the legislative object. Costs on that sort of scale are undoubtedly a deterrent and since the tribunal could find no basis for penalizing the parties for filing what they believed to be excessive evidence or departing from the pleaded issues it is difficult to see what they could do about it. One possible answer is to repeal Chapters VII and VIII of the 1988 Act altogether and rely on the Competition Act 1998. It is difficult to think of any licence term that would be varied or set aside by the Copyright Tribunal that would not also be a Chapter I or Chapter II prohibition. In addition, the Office of Fair Trading has considerable experience of dealing with unreasonable contract terms. Patent licensing was simplified by the repeal of ss.44 and 45 of the Patents Act 1977 by the Competition Act 1998. There seems no reason why copyright licensing should not similarly be rationalized.
 

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