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May 1, 2015
This article was written by Alexander Ross , Partner, Wiggin LLP and first published in the Entertainment Law on 6 February 2015.
*Ent. L.R. 40 Regulations introducing a UK licensing scheme for orphan works, and separate Regulations implementing the EU Directive on orphan works (“Orphan Works Directive”),1 both came into force on October 29, 2014. The Intellectual Property Office has accordingly published extensive guidance for rights holders and for applicants for orphan works licences, including guidance on respective rights of appeal and (most importantly) diligent search guidance for applicants.
Background
The Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 20142 allow for the licensed use of orphan works, for both commercial and non-commercial use, within the framework of UK copyright law, subject to appropriate safeguards and the payment of remuneration for absent right holders.
The IPO will be administering the new UK licensing scheme. It is the first scheme to use an electronic application system and will include a searchable “Orphan Works Register” which will contain details of all applications for orphan works licences, all licences that have been granted, and all applications that have been refused. Users will pay a fee to obtain a licence to use an orphan work which will be kept for the copyright owner if they subsequently come forward. Those applying for a licence will need to demonstrate that they have undertaken a diligent search for the right holder in order to submit an application. The IPO has a responsibility to satisfy itself as to the quality of the diligent search undertaken before a licence can be issued.
The Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014,3 which implement the Orphan Works Directive, allow for the digitisation of orphan works by certain cultural organisations for non-commercial use across the European Union. The Directive requires that all works determined to be orphan works must be included in an EU-wide database managed by OHIM. OHIM has now finished building the database, which is a single publicly accessible online platform (not to be confused with the IPO’s register). This database will collect information about orphan works currently held in public libraries, museums, archives, film and audio heritage institutions and public service broadcasting organisations all over Europe.
Guidance for applicants
Most recently the IPO has issued an overview for applicants under the UK domestic scheme to accompany the more detailed diligent search guidance previously published by the IPO for specific categories of work:
•film and sound;
•literary works; and
•still visual art.
The overview (“Orphan Works Licensing Scheme—Overview for applicants”) explains the basics of the scheme, and in particular the requirement that the prospective licensee must conduct a diligent search to try to find the missing rights holder(s). That search will need to cover all the right holders relevant to the types of use(s) the applicant intends to make, and the applicant must provide the IPO with the details of that search. The guidance gives the following example (in which “if” would perhaps have been better than “because”):
“… if you wish to make printed copies of a literary work, you may need the permission of both the author and the publisher, but if you wish to put the work on your website you may only require permission from the author because they have retained the digital publication rights.”
Applicants will need to need to submit a completed checklist of their diligent searches for each right holder as evidence that all relevant searches have been completed. This checklist must include the sources checked as well as further information on the process followed by the applicant in determining that the work is indeed an orphan work. The separate diligent search guidance provides template checklists for each category of work.
The overview also explains that applicants can rely on an existing diligent search for the right holder in a particular work without having to conduct a new search, provided that:
•it was submitted with a previous and successful licence application made within the previous seven years; or
•it was carried out under the EU Directive and the details were published on the OHIM database. *Ent. L.R. 41
The IPO reminds applicants that it can only license the rights of unknown right holders of a work or those who cannot be found. Applicants must also obtain all relevant permissions from known and locatable right holders of the work, but those permissions do not have to be secured before making their application in respect of orphan rights. However, where applicants have already gained permission(s) from any known and locatable right holders, details of these right holders can be included to support the application.
A fee is payable for each application. One application can cover more than one work, up to a maximum of 30, and the application fee increases from £20 for one work up to £80 for 30 works. A separate licence fee is payable for each use, and the licence fee will be set by reference to comparable market rates for non-orphan works.
The guidance states that where the proposed use of the work applied for means that there will be an adaptation, addition to, modification or deletion of the work, details must be provided. The IPO will then consider whether this change could amount to derogatory treatment, defined (as per CPDA s.80) as treatment that “amounts to distortion or mutilation of the work, or is otherwise prejudicial to the honour or reputation of the author or director”. The IPO may refuse a licence if the use is likely to be derogatory. It will also refuse a licence where the proposed use is “inappropriate”, a criterion which has no statutory basis in copyright law. For example, while this will depend on the individual circumstances of each case, use that is “offensive, in poor taste or contentious” is more likely to be considered inappropriate.
The IPO says that it will normally aim to deal with applications within ten working days, although this may not always be possible “if the application is a complex one or involves numerous different works with multiple right holders”. Applicants will not be able to vary applications once made but will have the opportunity to remove works from an application once it is approved.
All licences will be non-exclusive, for use in the United Kingdom only, and will be for a maximum term of seven years. The guidance reminds applicants that there is no power to allow sub-licensing under an orphan works licence, although it may be possible to specify further uses of a work by another party within the terms of the licence. Licences are also generally not transferable, although the IPO has discretion to transfer a licence where there are “compelling reasons to [do] so”, for example where an organisation or business is taken over or merged with another.
Diligent search guidance
The IPO has produced separate guidance on the diligent search requirements in relation to the specific categories of orphan works referred to above. Although there is no set way to conduct a diligent search, as the most appropriate method will depend on the information available on the work, the guidance provides checklist of “actions that applicants will usually need to take”.
Applicants will, for example, need to maintain a record of the diligent search. At the outset, however, they should contact the creator of the work (assuming they know who that might be) or his/her estate as they “might know who holds the rights”. Where the creator cannot be found applicants should attempt to “consult multiple sources to validate information”. Of course, where the person or company believed to be a right holder has been located but fails to respond to usage requests, the right or work cannot be declared orphan. Whether to respond to requests is entirely the rights holder’s prerogative. Where there is evidence to suggest that the right holder may be outside the United Kingdom an applicant will need to conduct a diligent search in sources relevant to that country.
Taking a closer look at the guidance on “film and sound”, the section on “sound recordings” is split between (i) “music where there is a composition” and (ii) “other sound recordings” such as spoken word recordings on history or natural science. It provides information on the relevant sources that must be consulted and additional sources that applicants will need to consider. By way of example, in relation to music (where there is a composition) the guidance lists by name relevant sources under the following checklist headings:
•orphan works registers (IPO and OHIM);
•industry producers’ associations (BPI, PACT, Music Producers Guild etc);
•databases of film or audio heritage institutions and national libraries;
•databases with relevant standards and identifiers (ISAN, ISWC etc);
•databases of all the relevant collecting societies;
•credits and other information appearing within the work; and
•databases of industry representative groups.
The guidance then sets out a non-exhaustive list of sources an applicant might also need to consider (on the basis that not all of these will be relevant to all types of work). These include:
•the provenance of a work (i.e. where the work was found);
•general internet searching;
•the WATCH (Writers, Artists and their Copyright Holders) database;
•advertising for possible right holder;
•the Copyright Hub; and
•online databases and catalogues.
If a creator is known or believed to be dead, the guidance suggests that the following sources would help to trace the heirs to the estate, as well as the date of death if this is not known: *Ent. L.R. 42
•digitised newspaper archives;
•genealogy sites;
•probate searches;
•the National Archives.
The Regulations implementing the EU Directive set out the minimum appropriate sources that need to be consulted by those organisations that qualify for usage under the Directive when completing a diligent search. The IPO suggests that those sources should not be considered definitive. Those who wish to use works under the Directive are therefore advised to consider the other sources listed in the guidance as well and determine whether they are relevant to complete a diligent search for the work.
Guidance for right holders
Apart from the diligent search criteria, the key safeguards for the right holder are the existence of the orphan works registers. When the IPO receives an application to use an orphan work, the application details will be checked and then the key details will be added to the register. Where the work is a still visual work (for example, a photograph, a picture or a drawing) an image of it will also appear on the register. These details will therefore be available for right holders to check while the application is being considered and the diligent search is being approved by the IPO.
The right holder will need to satisfy the IPO that he/she/it is the right holder. Supporting evidence, including contracts, wills and relevant correspondence, will be required. The IPO will not get involved in disputes over ownership and will make a decision on whether to pay out licence fees to individuals on a case-by-case basis.
If the IPO is satisfied with the right holder’s status, any licence that has already been granted will continue for the remainder of its term, but the IPO will not issue any new orphan works licences that cover those rights within that work. Any subsequent licence will be a matter for negotiation between the rights holder and the prospective licensee(s). The register will be updated to reflect the non-orphan status of the relevant work (or the semi-orphan status if some right holders have been located but not others in the case of a jointly owned work).
Provided the right holder has come forward within eight years of the grant of the orphan works licence, the IPO will pay the right holder any licence fee received by it in respect of that work (or the appropriate part of the licence fee where there are multiple right holders). If the claim is made after eight years, the IPO has discretion to pay the right holder which it may exercise where the there are “good reasons” to do so. Money not paid to right holders will be used to fund social, cultural and educational activities.
Appeal guidance
Both applicants and right holders may appeal IPO decisions. In the first instance any appeal must be to the IPO, although further rights of appeal lie to the First-tier Tribunal (“FTT”) for right holders and to the Copyright Tribunal for licensees (and prospective licensees).
Applicants can appeal to the IPO if they believe the IPO has made a mistake:
•in refusing an application;
•in any condition attached to a licence; or
•in the licence fee quoted.
A full explanation will be required along with supporting documentation. Right holders can appeal to the IPO if they believe that in reaching a decision it has acted improperly or failed to discharge its obligations under the Regulations.
The IPO will aim to respond with ten days in non-complex cases and if the applicant/right holder isn’t happy with the response he/she/it can appeal to an IPO Manager who was not involved in the original decision or the appeal response.
The Copyright Tribunal can only consider appeals by licensees or prospective licensees regarding the refusal to grant a licence, a condition imposed by the IPO in respect of a licence, or the licence fee charged by the IPO. The Tribunal may consider appeals by right holders relating to the EU Directive and a failure to agree fair compensation. For appeals under the Directive, the right holder must have attempted to negotiate fair compensation with the user of the orphan work before approaching the Tribunal. Claims under £50,000 where the facts and legal issues are not complex will normally be dealt with using the Tribunal’s small applications track. Cases will be dealt with on paper unless either party requests a hearing it or the Tribunal considers it appropriate.
Right holders have a right of appeal to the FTT on grounds that the IPO has acted improperly or failed to discharge its obligations under the Regulations in reaching a decision. As part of its reasoning, it may identify what “went wrong”. It would then be for the IPO to reconsider the case in light of the Tribunal’s findings. The FTT cannot replace the IPO’s decision with its own, or award compensation. The guidance sets out examples of circumstances where the IPO could have acted improperly or failed to meet its obligations under the Regulations:
•failure to fulfil its obligations to satisfy itself that a reasonable diligent search was carried out; or
•failure to put relevant details of the work on the register of orphan works; or
•failure to take into account what types of licence fees are paid for the similar use of equivalent non-orphan works, when setting the licence fee for the use of an orphan work. *Ent. L.R. 43
Comment
It is clear that a great deal of time, effort and thought have gone into setting up the UK scheme for licensing commercial and non-commercial uses of orphan works, notwithstanding some uncertainty about the usefulness of such a scheme. The scheme is, after all, limited to uses in the United Kingdom, and clearance for non-UK uses must be sought on a territory-by-territory basis. As the UK scheme is one of very few such schemes worldwide, overseas clearance under similar schemes is unlikely to be possible in many cases (assuming that rights holders for those territories cannot be identified). And as noted by respondents to the Government’s technical consultation on orphan works, it is not clear whether a licence of an orphan work for website use is of any practical use if the licence is only granted for the United Kingdom. Nonetheless, creators who have until now used works of uncertain provenance without authorisation on the basis that insurance is available in the case of later claims may feel compelled to use the scheme.
A further practical consideration is that collective management organisations must in practice be licensing orphan works on a regular basis, particularly if it is remembered that if all co-authors of a copyright work are identifiable but just one author cannot be located then the work is an orphan work to the extent of that author’s interest. This is even more likely to be the case when the organisation is licensing on an extended collective licensing basis, and will not know before the licence is issued whether the work in question is an orphan work or not (whether wholly or partly). It is unclear how the reality of collective licensing squares with the new orphan works regime.
Ent. L.R. 2015, 26(2), 40-43
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