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IPO guidance on implementing collective rights management directive: investigation and enforcement activities

The Intellectual Property Office (IPO) is obliged to have regard to information which is received regarding behaviour or activities which may constitute a breach of the Collective Management of Copyright Regulations. However (with the exception of a request from a national competent authority in another member state), the IPO is not obligated to take any particular action in response to such information.

Before considering whether to proceed with a formal investigation which could result in the use of the enforcement powers available under the Regulations, the IPO would usually consider whether any potential non-compliance could be informally addressed. The IPO intends to maintain a regular dialogue with parties affected by the Regulations including inter alia CMOs, IMEs, and bodies representing right holders and users, and will use these forums to address potential issues as they develop. In the absence of a compelling reason to move immediately to a formal investigation, the IPO will encourage resolution through informal means, including the issuing of guidance.

The IPO will be more likely to formally investigate a possible breach of the Regulations where there is a risk of ongoing negative impact on the parties affected by the breach – for example, financial or reputational loss. The IPO will also assess whether the breach and an investigation that could result from it could have a wider impact on collective rights management in the UK. For example, the IPO may be more likely to initiate an investigation where it considers that enforcement action to act upon the possible breach could prevent more serious impacts in the future.

The IPO will be more likely to conduct an investigation where it feels that the breach connects to a broader issue of compliance. For example, a large volume of complaints relating to a single issue could indicate a systematic failure to comply with the Regulations – particularly where similar complaints emerge from different sectors. The IPO could also consider whether information about a potential breach or series of breaches evidences a systemic failure to comply in a particular organisation.

The IPO will not usually launch an investigation in relation to an individual complaint where the option to use a CMO’s internal complaints process has not been explored. The IPO will also consider whether the availability of other routes to persons in relation to non-compliance would be more appropriate than enforcement under the Regulations.

The IPO may undertake various activities in the course of an investigation. This could include informal information-gathering, the commissioning of specialist research or analysis, facilitating meetings, or other such activity as the IPO believes may support its investigation. There are no statutory limits on the timescale of an investigation. If the IPO provides an indicative timescale to any party, this will not be binding.

Where the IPO considers that a breach of the Regulations has occurred, it will consider whether the use of its enforcement powers is appropriate or proportionate. The IPO will consider which enforcement action is appropriate according to the circumstances of the individual case and the limits set by the Regulation. The IPO is more likely to use informal means where a breach of the Regulations is less serious or can be quickly corrected before it has a significant detrimental impact.

In cases of more serious breaches, the IPO will adopt a stepped approach in most cases, beginning with the issuance of a compliance notice. A compliance notice may be withdrawn. A compliance notice would be withdrawn, for example should IPO no longer think that there has been a breach. The IPO cannot impose a financial penalty following the giving of a compliance notice unless the party has failed to comply with that notice, or any undertaking given in relation to it.

In order to impose a financial penalty on a person, the IPO must be satisfied that a breach by that person of the Regulations has occurred. Where the person in breach is a CMO a financial penalty can be imposed instead on particular individuals within the CMO. This facility could be used where the breach is attributable to a senior individual, such as a director. When deciding on the level of a penalty, the IPO is bound by the maximum level set out in the Regulations, and is required to consider what penalty is appropriate having regard to the nature of the breach. In practice, the IPO will have regard to aggravating and mitigating factors.

The IPO can rescind the imposition of the penalty by giving notice to the person upon whom it has been imposed. This could occur in the event that new evidence emerges which could, if it was known at the time the penalty was imposed, have changed the decision to impose a penalty. Any decision by the IPO to impose a penalty is subject to appeal to the First-Tier Tribunal.

Any financial penalties recovered by the IPO will be paid into the Consolidated Fund, and so cannot be used to fund the IPO’s activities (whether in relation to its role as the national competent authority or otherwise). It is not possible for the IPO to re-direct penalties to provide compensation to injured parties.