Going for growth

The much-anticipated report by Professor Ian Hargreaves, entitled Digital Opportunity – A review of Intellectual Property in Growth, has now been published.

The report was commissioned by Prime Minister David Cameron in November 2010, against the background of his claim on announcing the review that “the founders of Google could never have started their company in Britain… because our system is not as friendly to innovation”. Having concluded that the UK’s current IP systems are falling behind modern requirements, especially in the area of copyright, the report lists 10 recommendations aiming to create a clear strategic direction for IP policy and potential reform in the UK, based on an objective analysis between the competing interests of digital media and consumers to promote and support economic growth.

The report considers a variety of IP rights against the background of how modern businesses and consumers have come to use and rely on them in the digital age, and tries to marry the two into a viable framework.

Some key points to emerge from the report are:

Digital Copyright Exchange

A key proposal is to create a Digital Copyright Exchange. It is hoped that a new centralised online database would permit the efficient and effective licensing of digital works through ready access to materials, the rights holders and an agreed licensing system. This could also provide assistance to deal with works where the author cannot be found (so called “orphan works”), with the Exchange being used to unlock these. A new agency would require to be set up to administer the Exchange and resolve any disputes between consumers and rights holders.

This proposal has received mixed reviews from industry, which claims that to have any impact in the global economy, an international system would be required. Critics claim that it may introduce a requirement in the UK to register works to obtain copyright protection, as the incentives to encourage rights holders to make their materials available include limiting the legal protection available to works not on the Exchange. It seems clear that such issues are unlikely to be resolved and the system implemented by the proposed date of 2012.

Reforms to copyright law

One of the most widely anticipated outcomes relates to the reformation of UK copyright law. The UK is seen as having a restrictive copyright regime compared to many countries in Europe and the US. While the report stops short of recommending that the UK should follow the US in creating wide “fair use” exemptions, legislative changes are proposed which aim to bring copyright law into the modern age. These include:

• legitimising private copying/ format shifting (such as copying music from a CD to an iPod), which is currently widely practised but technically illegal;
• creating an exception to allow parodies of copyright works as a form of freedom of expression; and
• extending non-commercial research exemptions and allowing library archiving of copyright works.

These reforms are less controversial, as essentially they would involve the UK adopting EU-wide copyright infringement exemptions currently available. However it is questionable whether any extensive revisal of the UK Copyright, Designs and Patents Act 1988 will be undertaken in the foreseeable future.

Enforcement

The report criticises the lack of affordable protection and enforcement of IP for SMEs and proposes a fast track dispute resolution procedure to deal with low value IP disputes. In more general terms the report proposes that the Government should pursue a policy based on “enforcement, education and… [an expansion of] the legitimate market for digital content”, to combat piracy and the problems of file sharing.

It also suggests that the enforcement regime of the Digital Economy Act which is due to come into force next year should be monitored and compared to other countries so that it can evolve to suit market conditions and needs. The report further takes the view that any legislative reform increasing penalties or widening the scope of infringing activities should be based on clearly and objectively proven harm to the rights holders.

Comment

The report is welcomed as a focal point for possible reform of the UK intellectual property framework. However, it is premature to portray it as a turning point, as there is a real question as to whether there is political will to implement the recommendations, and indeed whether the recommendations are sufficiently detailed to have any practical impact. For example, the report notes (at p6) that as respects the Gower Report in 2006, only 25 out of the 54 recommendations have been implemented to date. Whether or not the Hargreaves Report’s recommendations come to fruition remains to be seen, but it will hopefully provide the impetus for some modernisation of the UK’s IP laws.

• The full report can be found at www.ipo.gov.uk/ipreview-finalreport.pdf