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After six months of review, Professor Ian Hargreaves’ much anticipated report "Digital Opportunity - A Review of Intellectual Property and Growth" was finally published on May 18th 2011. The report was commissioned in November 2010 by Prime Minister David Cameron, amid concerns that the UK's IP system, and particularly copyright law, has not kept pace with digital developments and, accordingly, is unfit for the internet age.
Professor Hargreaves was, in particular, asked to look at what the UK could learn from the US's "fair use" rules, which cover circumstances when copyrighted material may be used without the rights holders’ express permission. He advises that importing fair use wholesale is unlikely to be legally feasible in the UK, given the UK’s obligations under European law. Instead, the UK can achieve many of the benefits of fair use (which is more flexible and less rights owner friendly than the European approach), through adopting copyright exceptions already permitted under European law.
Key Recommendations:
1. Copyright Licensing
- The UK should create the world’s first "Digital Copyright Exchange", to be implemented by the end of 2012. By this, Professor Hargreaves envisages a digital market place, akin to a "one stop online copyright shop" whereby licences in copyright content can be readily bought and sold. It is anticipated that a Digital Copyright Exchange would help centralise and simplify the process, making it more automated, faster and cheaper. However, the target of a 2012 implementation date is regarded by many as overly ambitious, given that it will take significant time, resource and commitment from rights holders to ensure that the relevant rights to the relevant works are recorded accurately within the Exchange, and to enable any kind of efficient licensing solution. Other questions such as who will fund and police the Exchange, and how restrictions on licences will be recorded, will also need to be considered.
- The UK should also support moves by the European Commission to establish a framework for cross border copyright licensing in the EU with a common code of practice for copyright collecting societies to ensure that they operate in a way that is consistent with the further development of efficient, open markets.
2. Orphan Works
- Legislation should be introduced to permit access to "orphan works" (i.e. works where the copyright holder cannot be traced). Often, where one of potentially many copyright owners of a particular work cannot be located, they are effectively holding the interests of others to ransom because, without their consent, it is an offence to exploit that work commercially.
- A work should only be treated as an orphan work if it cannot be found by a search on the proposed Digital Copyright Exchange databases.
- Professor Hargreaves advocates the establishment of an extended collective licensing system for mass licensing of orphan works, and a clearance procedure for use of such works. The proposal will allow organisations such as the BBC and BFI to use copyrighted archive material that would previously not have been permitted to be shown because of doubts about ownership.
3. Copyright Exceptions
- Perhaps the most important idea in the report is that the UK should take advantage of all the EU sanctioned exceptions to copyright, bringing our law more into line internationally with more progressive copyright regimes. Specific proposals include allowing exceptions for:
- copying for private purposes, such as shifting music from a laptop to an mp3 player. Making "format shifting" legal is one solution proposed to bring the UK’s regime up to date with current patterns of media consumption, clarifying an area of legal uncertainty for consumers.
- copying which does not conflict with the core aims of copyright - for example, data mining or search engine web-page crawling and indexing, which involve the copying of content so that online service providers can analyse and enable access to information.
- copying material for use in parody. The report cites recent parody "Newport State of Mind" (based upon "Empire State of Mind", by Jay-Z) which resulted in action by the producers, EMI, and the video’s removal from YouTube. Under US "fair use" exceptions, parodies are often permitted which explains why previous parodies of the same song in the US have attracted less attention.
4. Patents and Design
- Government should take a leading role in promoting international efforts to cut backlogs and manage the boom of patent applications through "work sharing" with patent offices in other countries. Presently, there are 38 different patent regimes within Europe and national patents have to be relied upon and litigated separately in each country in accordance with the laws of those countries. Government should therefore attach "the highest immediate priority to achieving a unified EU patent court and EU patent system", which promises significant economic benefits to the UK.
- Government should also continue to support the exclusion from patentability of non-technical computer programs and business methods, unless there is clear evidence of benefit.
- It is also recommended that the laws relating to the UK’s design sector, the largest source of intangible investment in the economy, require a thorough reassessment due to the sector’s perceived disadvantage through having only a "patchwork" of applicable IPR provisions.
5. IPO Empowerment
- Changes to the Intellectual Property Office’s (IPO) powers are required to enable it to help the IP framework adapt to future economic and technological change. As part of its powers, the IPO should be empowered to issue statutory opinions to help clarify copyright law, where needed.
The Hargreaves Review has generally been considered to be careful and balanced and to have identified numerous areas for improvement, without proposing too much of an overhaul or measures that rights-owners might find particularly objectionable. However for those expecting significant, immediate changes, there is likely to be disappointment; the Review is determinedly non-radical.
A number of the points explored in the report have already been considered in detail by previous Governments in recent years. Many of the conclusions of the Gowers review in 2006, for example, which are echoed here, were not followed up with suitable legislation. For example, Gowers recommended a limited exception for format shifting, which the Government concluded in 2009 would be too complex to implement and was therefore abandoned; and an exception for parody, caricature and pastiche, which the IPO considered was insufficiently justified to warrant introduction. It will be interesting to see whether the Coalition Government will come to different conclusions.
Additionally, practical implementation of the solutions is likely to prove challenging. The UK’s IP laws are dependent on a myriad of international and European treaties which make unilateral reform of its copyright and patent systems impossible to achieve. Commentators suggest that real reform, therefore, will need to be pursued at the European or international level. Additionally, as noted above, the target of a 2012 implementation of the Digital Copyright Exchange is also regarded as ambitious and perhaps not practical.
In any event, Professor Hargreaves’ recommendations provide a good starting point for detailed policy consideration and argument, paving the way for a less rigid UK copyright system which welcomes newcomers to digital markets and encourages innovation and economic growth.
The Government hopes to make a full response next month.
By Daania Karim and David Naylor