Hargreaves makes proposals to align UK IP and copyright law with digital era in report

Intellectual property (IP) and copyright laws in the UK should be overhauled and brought in line with today's digital era, according to recommendations in the Hargreaves Report published last week (18 May).

The report, compiled by Professor Ian Hargreaves (pictured) of Cardiff University, outlines 10 proposals intended to update the UK's outdated laws and promote innovation, with the report suggesting that modernised IP systems could add up to £7.9bn to the 
UK's economy.

In addition to calling for laws protecting designs and copyright to be overhauled in the UK, the report, which makes many recommendations initially put forward in the 2006 Gower review of IP but never adopted, also calls for the UK to champion some reform across Europe – such as the creation of a unified European Union patent court and a single European patent system.

Key ideas include the launch of a Digital Copyright Exchange to be implemented by the end of 2012, which would act as a central licensing hub, making it easier to obtain clearance for the use of copyrighted material. The report also proposes that the Government should legislate to permit access to orphan works, where the owner cannot be traced – allowing the use of significant numbers of currently unusable works.

Hargreaves recommends legalising format-shifting (copying CDs or DVDs digitally) for personal use, which has already been implemented across much of Europe and relaxing the laws on parody. This would allow broadcasters more scope for showing material such as the Newport State of Mind YouTube clip, which parodied a song by Jay-Z and was removed from the internet following a copyright claim by music producer EMI.

Hargreaves said: "In recent years the UK has failed to make the changes needed to modernise copyright law, for which we will pay an increasing economic price as we make our way into the third decade of the commercial internet. My recommendations are designed to enhance the economic potential of the UK's creative industries and ensure that the emergence of high technology businesses, especially smaller businesses, in other sectors is not impeded by our IP laws."

Hargreaves' report was commissioned by Prime Minister David Cameron in November 
last year.

Business Secretary Vince Cable said of the recommendations: "The report highlights real scope for changes to copyright laws which could add enormous value to the UK economy. IP affects what we can and can't do in business, education and in our daily lives. Technological innovation, successful creative businesses and strong international brands need to thrive."

However, some have criticised the report for not going far enough, for example by not supporting the US concept of fair use, which allows significant portions of work to be used without permission.

Mark Owen, head of the IP practice at media and entertainment law firm Harbottle & Lewis, said: "The review seems to be careful and balanced. It is also determinedly non-radical, which will disappoint some who expected big immediate changes.

"But it is important to remember that this is a prospectus that lays out the scope of what should be looked at but with plenty of scope still for detailed policy consideration and argument. And the report's approach recognises that simplistic broad strokes are difficult to make in the complex, and interconnected world of IP."

———————————————————————————————————————————————–

Industry reaction to the proposals

"A large aspect of the review is focused on private copying and copyright. It contains a fresh danger for both content holders and equipment manufacturers since it may open the door to permitting home copying of content subject to digital rights management (DRM). Some important lobbying may be needed to ensure that the implementation of the report does not accidentally remove protection from DRM content or platforms." – Justin Watts (pictured), intellectual property (IP) partner, Freshfields Bruckhaus Deringer

"The report has been thoughtfully put together and centres largely on copyright, which is the main area considered to be in need of modernisation. It is a good thing that we have not gone as far as the US fair use approach because that would lead to a torrent of litigation. I know that the branding community was concerned about the report possibly being anti-IP in tone, but it looks like their concerns and feedback has been heard and the report is more balanced." – Vanessa Marsland, 
IP partner, Clifford Chance

"The big idea is the Digital Copyright Exchange or 'copyright shop' which would facilitate digital licensing. Hargreaves wants the Government to take the lead on this, although not to take the task on itself, with an ambitious implementation target of the end of 2012. The aims of the review as a whole are good, but how far they will actually be implemented is still up for debate, many of the conclusions of the Gowers report which are echoed here were not followed up with suitable legislation." – Rachel Montagnon, IP professional support consultant, Herbert Smith

"It is, of course, encouraging that the report emphasises the importance of IP to the economy, but this is hardly surprising given this Government's and the last Government's references to the knowledge economy. Also, given the fact that the manufacturing assets are in the main not in the UK, clearly we must support and protect the intellectual efforts of those who innovate.

"I thought it was a sensible report regarding its focus on copyright. There has been a lot of speculation about the death of copyright, but the recommendations given provide a good start to boosting the links between businesses operating in the digital world and those creating content, while still recognising the need to preserve the rights of the creative industries. Hargreaves has also addressed some dated legislation that is in desperate need of change, which though fairly mandatory, is a positive move. The area in which I think the report has fallen down is that it only focuses on the UK and, if we are to see the true economic benefits of change to IP and copyright, we need to be working more closely with other governments." – Simon Levine (pictured), global co-head of IP and technology, DLA Piper

"This feels like deja-vu, in some respects, of the discussions that went on in the 1980s over tape-to-tape recordings. We still have the same problems in that by legalising format-shifting you are in essence devaluing the importance of copyright in the eyes of the public. The Digital Copyright Exchange is a good idea and is similar to the system of collecting societies we already have, for example, for licensing music, extracts from newspapers and books. The question is how the systems will work alongside each other and whether collecting societies will need to give up their rights in order to centralise works into one database to create an effective scheme." – Conor Ward, computer, communications and media partner, Hogan Lovells

"The aims of the review are laudable and it rightly identifies some of the pressing problems with our current IP regime. However, the implementation of many of its proposed solutions may prove extremely challenging given our position. Britain's IP laws are so dependent on myriad international and European treaties that unilateral reform of our copyright and patent systems is impossible to achieve. Real reform will need to be pursued at a European or international level, and many of the proposed solutions will need significant attention to detail in order to become viable. The abolition of so-called 'patent thickets' will be a Herculean task. The involved nature of patents which cover not only free-standing inventions, but also developments of previous inventions, will ensure the thinning out of the current stock of patents is a prolonged and intricate process." – Simon Mounteney, partner, Marks & Clerk

"On the patent side, no real radical thinking but nice to hear that we will give the highest priority to European Union patents court and single patent and all should be done to promote this. However, no solution is given as to how we can have an EU patent court within the constraints laid down by the European Court of Justice earlier this year." – Huw Evans, IP partner, Allen & Overy

———————————————————————————————————————————————–

Hargreaves' 10 recommendations

1. Evidence – The Government should ensure changes to the IP system are driven by objective evidence and policy should balance potential benefits for rights holders against the impact on consumers.

2. International priorities – 
The UK should prioritise the creation of a single European Union patent court and system. It should also focus on pursuing its IP interests in emerging economies such as China 
and India.

3. Copyright licensing – A Digital Copyright Exchange (DCE) should be created to act as a central database for copyright clearance. The UK should support creation of a cross-border copyright licensing framework.

4. Orphan works – Legislation should be created to allow for extended collective mass licensing of orphan works and a clearance procedure for the use of individual works.

5. Limits to copyright – The Government should resist over-regulation. It should allow copyright exceptions for format shifting, parody, non-commercial research and library archiving.

6. Patent thickets and other obstructions to innovation – Government should work to cut the backlog of patent applications through "work sharing" with patent offices in other countries.

7. The design industry – The Intellectual Property Office (IPO) should conduct a review of the relationship between design rights and innovation and look at using the DCE.

8. Enforcement of IP rights – The Government should look at measures to strengthen legitimate markets in copyright and IP-protected fields.

9. Small firm access to IP advice – The IPO should draw up plans to improve accessibility of the IP system to smaller companies, including access to lower cost advisers.

10. An IP system responsive to change – The IPO should be given the necessary powers and mandate to ensure the UK's IP system promotes innovation and growth and to issue statutory opinions.

• Click here for the latest reader comments as they come in