The Hargreaves Review of Intellectual Property and Growth – implications for business

background – why the Review matters to business

The latest Government-commissioned review of UK IP law and policy has just been published. This is one of four in the last six years but why is this one different and why should businesses care? For one thing, the Review has the support of David Cameron but it also reflects a widespread concern that IP law and in particular copyright is no longer fit for purpose in a world of apps, mobile devices, digitised content and online publishing, internet search engines etcetera.

So businesses need to focus on the Review as its recommendations are far-reaching. At its core is having a UK IP system that promotes innovation and growth – clearly a laudable objective – and it also advocates an evidence-based approach to formulating IP policy with this core goal in mind. No special interest group pleading here please – it all needs to be based on objective evidence. Indeed the Review modestly suggests that if we get things right and implement its recommendations, we might expect to see an increase between 0.3% to 0.6% of annual GDP growth. Who would argue with that?

recommendations and issues for business

The Review has ten broad recommendations. Here are some of the more relevant ones for businesses.

1. Patents – these either cost too much to obtain and enforce (so we need a unified EU patent court and EU patent system) and in certain industries especially hi-tech (computing/telecoms) there are too many patents ('patent thickets') either clogging up patent offices or blocking innovation. One solution is to make it more expensive to renew patents to discourage the ones that are of negative value overall. Also the rules on granting computer-related patents need to be clearer and stricter so that there is less risk that patents are extended to protect what are really non-technical inventions and business methods. Most of this sounds good news for UK business but there is a risk that UK/EU patent law will further diverge from US and emerging economy patent laws in the hi-tech area and this needs proper analysis.

2. Designs – the protection of designs in the UK is complicated and a bit of a 'Cinderella' subject. This area needs detailed review not least to see if the system can be made clearer. Design protection is often overlooked by UK business so anything that improves protection in this area should be welcomed.

3. Copyright and orphan works - these are really at the heart of the Review. Much of the analysis in the Review focuses on the problem of clearing digital rights as new online products are developed – either because owners can't be traced (so called 'Orphan Works') or because it costs too much or is just too difficult. These aren't new problems of course but there is real concern that innovation and growth is now being hampered because of this. So the Review suggests the Government should encourage the creation of a 'Digital Copyright Exchange' and cross-border licensing at EU level to deal with rights-clearance and a new law to deal with Orphan Works. Industry and the media and publishing industries in particular should welcome this.

4. Exceptions to copyright - more controversial however is the recommendation that the exceptions to copyright should be broadened as far as possible within the EU legal framework to include exceptions for format shifting, parody, non-commercial research, and library archiving. The UK should also promote at EU level an exception to support text and data analytics (there is concern that copyright law is blocking valuable medical and other research). Then, even more controversial, there is the suggestion that the UK should give a lead at EU level to develop a further copyright exception designed to build into the EU framework adaptability to new technologies. This would be designed to allow uses enabled by technology of works in ways that do not directly trade on the underlying creative and expressive purpose of the work. The thinking here is that innovative content and copyright users such as Google would find it impossible to start their businesses in the UK/EU as unlike in the US the UK/EU courts are not able to assess the overall fairness and impact of what might otherwise be copyright infringement eg for an innovative search engine or information tool. So whilst the Review is not suggesting a broad US style 'fair use' exception, it is suggesting a lesser, more tailored version aimed at new technologies. Finally, the Government should also legislate to ensure that these and other copyright exceptions are protected from override by contract. In other words, publishers who licence data or content will not be able to exclude these exceptions as they can in the main do today.

This last recommendation is the most difficult one for business and opinion is bound to be divided. Publishers and others involved in clearing content will welcome more effective rights-clearance and freedom to exploit Orphan Works. But at the same time any extension to the current copyright-exceptions and in particular making them override contracts, risks destabilising a system that mostly works well for publishers even if users may have a different view. Also, broader exceptions may be seen as an 'infringers' charter'.

5. Enforcement of IP rights - clearly IP rights only have value if they can be effectively enforced. Recommendations here include an integrated approach especially for online piracy based upon enforcement, education and, crucially, measures to strengthen and grow legitimate markets in copyright and other IP protected fields. In order to support rights holders in enforcing their rights, the Government should also introduce a small claims track for low monetary value IP claims in the Patents County Court. Industry should welcome this.

6. Small firm access to IP advice - it has long been considered that SMEs get a raw deal from IP protection. So the IPO (UK IP Office) should draw up plans to improve accessibility of the IP system to smaller companies who will benefit from it. This is certainly positive for SMEs.

conclusion

At 123 pages long, the Review is hardly light reading but if its recommendations are followed in full there will be significant changes to the UK IP system especially for copyright and patents, and probably designs too. Brands, domain names and trade marks are not however the focus of the review – not that they should be forgotten about especially online.

Businesses will want to monitor developments closely – especially publishers or heavy users of content. The recommendations here are potentially far reaching.

Finally how likely is it that this Review any more than its predecessors will actually be implemented? Whilst the Review advocates an evidence-based approach to policy-making this seems naïve. When it comes to policy-making in an area as complex as IP, how likely is there to be clear evidence to justify many of the recommendations? Politicians are sure to be presented with a barrage of evidence from interested parties that will conflict. And then the dirty business of politics, lobbying and compromise begins.

publishing

• advice for publishers
• advice for authors

resources

• key contacts
• our team
• news and updates
• guides and information sheets
• our experience
• training
• useful links