UK Goverment responds to The Hargreaves’ Review – it’s a yes!

September 2011

All areas

The UK Government’s have responsed to Professor Ian Hargreaves review of IP law in a Response that accepts all ten of Professor Hargreaves’ recommendations.

The Government say that their goal is to have measures in place by the end of this Parliament that will realise the Review’s vision and deliver real value to the UK economy, and to the creators and users of Intellectual Property saying  “the Government announced plans to support economic growth by modernising UK intellectual property laws. Ministers have accepted the recommendations made in an independent review which estimate the potential to deliver up to £7.9 billion to the UK economy”. You can read the response in full here (pdf download) as well as a letter from UK Business Secretary Vince Cable to stakeholders saying that consultation will begin this autumn.

The Response covers a number of topics (I haven’t covered patents and design rights here) and even suggests a new name for the Patents County Court and a new ‘small claims’ track for IP. The only seemingly negative for content owners is that site blocking legislation will not be brought in although in light of Newzbin2 this may not be of such concern. Anyway, to précis the Response, and using the Reponse’s headings:

“Intellectual Property is important to growth”
The Government accepts the Review’s overall conclusion that IP is important to growth and that IP laws are, in some cases, obstructing growth. The Government is particularly concerned to reduce barriers to creating viable IP-using small firms, whether in existing industries or in new niches.  IP is intensely valuable to the UK; that value can be increased if we act effectively now and will decrease if we do not.

The IP framework is falling behind and must adapt”
The Government shares this concern.  There is a constant need for the IP system to adapt to new forms of innovation, creativity and technology, but that need is now particularly marked in copyright because technology has made copying and communicating many works very easy and created opportunities for the widespread and efficient use of digital content.  As the Review notes, the advent of 3D printing may herald a time where copying material objects becomes similarly straightforward.  Cloud computing and the ‘internet of things’ are based on ever-increasing flows of data.  There are implications here for privacy and security that go far beyond IP but have a bearing on future public policy, IP included.

“Evidence should drive policy”
Fundamentally, the Government agrees with not only the Review’s headline conclusion but also with its underlying critique: too many past decisions on IP have been supported by poor evidence, or indeed poorly supported by evidence To deal with the first issue, the Government has strengthened the IPO’s economics team and begun an ambitious programme of economic research with partners. The IPO will publish its  research programme for the coming year, including work in response to the Review, in Summer 2011. The fundamental issue however is that key data is held by business and other organisations.  IPO will work with those organisations to help them offer good-quality evidence; our challenge to them is to do so.

“A digital copyright exchange will facilitate copyright licensing and realise the growth potential of creative industries”
The Government agrees it is right to help develop effective markets in copyright licensing where they are not emerging spontaneously.  We believe a Digital Copyright Exchange (Recommendation 3) has the potential to offer a more efficient marketplace for owners and purchasers of rights, as well as opening up new markets to creators who may not have previously been able to access them.

Consideration is currently being given to how this complex project is best taken forward, and by whom.  The Government will announce these arrangements in due course.  The person or persons commissioned to lead this work will be asked to:

– facilitate the creation of a viable financial model for the DCE;

– bring together industry partners and sectors of the creative world to create a framework for a distributed rights exchange and the necessary supporting systems to allow a functioning licensing system by the end of 2012; and

– report on progress, by the end of 2011

The Government will work to ensure that Crown copyright materials are available via the exchange and will encourage public bodies to do likewise.

“Further steps to modernise copyright licensing”

Cross-border licensing: The Government welcomes the Review’s identification of opportunities for UK licensing bodies in European moves to improve the operation of copyright licensing (Recommendation 3).  An efficient and flexible cross-border licensing framework is essential to the creation of a single EU
market for content that smaller firms can readily enter and succeed in.  The Government welcomes
the European Commission’s initiative in proposing a cross-border licensing framework and will work with UK interests and the Commission to develop proposals that are compatible with current effective licensing models in the diverse industries affected.

Orphan Works: There are opportunities too in respect of so-called orphan works (Recommendation 4).  The Government agrees with the Review’s fundamental premise that it benefits no-one to have a wealth of copyright works be entirely unusable under any circumstances because the owner of one or more
rights in the work cannot be contacted.  This is not simply a cultural issue; it is a very real economic
issue that potentially valuable intangible assets are simply going to waste.  The Government will this
autumn bring forward proposals for an orphan works scheme that allows for both commercial and cultural uses of orphan works, subject to satisfactory safeguards for the interests of both owners of ‘orphan rights’ and rights holders who could suffer from unfair competition from an orphan works scheme.

The role of collecting societies: Copyright collecting societies play a major role in copyright licensing.  The Government sees collecting societies as an important part of the UK’s future success whose status would be reinforced by visible adherence to good practice.  Like the Review (Recommendation 3), the Government has heard a range of concerns about the operation of copyright collecting societies in the UK and elsewhere: from members on questions of transparency and governance, and from licensees concerning what they see as heavy-handed, misleading or unfair practice in charging for usage of works.  The EU is looking at the need for a common standard within Europe, which the Government welcomes; such transparency would be in the interest of UK creators and rights holders.  If the UK is going to be a leader in European licensing, we will need also to be a leader in good practice.  This is particularly true if we are to introduce an orphan works or extended collective licensing regime. The Government will publish minimum standards for voluntary codes in early 2012 and consult with collecting societies on
their implementation.

“Copying should be lawful where it is for private purposes, or does not damage the underlying aims of copyright”

There is a fundamental role for copyright in providing appropriate incentives for the creation of valuable works.  The Government has no intention of prejudicing this role, on which much value for the UK depends.  We nonetheless believe the Review is right to identify activities that copyright currently
over-regulates to the detriment of the UK, and to propose changes to tackle the problem  (Recommendation 5). the Government agrees with the Review’s central thesis that the widest possible
exceptions to copyright within the existing EU framework are likely to be beneficial to the UK, subject to three important factors:

  • That the amount of harm to rights holders  that would result in “fair compensation”

under EU law is minimal, and hence the amount of fair compensation provided would be zero. This avoids market distortion and the need for a copyright levy system, which the Government opposes on
the basis that it is likely to have adverse impacts on growth and inconsistent with its wider policy on tax.

  •  Adherence with EU law and international treaties.
  •  That unnecessary restrictions removed by  copyright exceptions are not re-imposed by

other means, such as contractual terms, in such a way as to undermine the benefits of the exception.

The Government will therefore bring forward proposals in autumn 2011 for a substantial opening up of the UK’s copyright exceptions regime on this basis.  This will include proposals for a limited private copying exception; to widen the exception for non commercial research, which should also cover both text- and data-mining to the extent permissible under EU law; to widen the exception for library archiving; and to introduce an exception for parody.

“Building future-proofing into the legislative and regulatory framework…”
The Review recognises that the UK’s scope for action on copyright exceptions is limited.  It makes
the case for broader changes at the EU level in order to enhance economic growth now and – through building in adaptability to new technologies – in the future.  In the Review’s judgement, and the
Government’s, there is a need for a wider set of exceptions at EU level to achieve this, again without
prejudice to the provision of appropriate incentives for creation of works (Recommendation 5). The Government will aim to secure further flexibilities at EU level that enable greater adaptability to new technologies including use of data for research.  We support a review of relevant EU legislation to this end and will be in dialogue with European partners to identify how this can best be achieved.  IPO will make the removal of EU-level barriers to innovative and valuable technologies a priority to be pursued
through all appropriate mechanisms.

Effective enforcement requires education, effective markets, an appropriate enforcement regime and a modern legal framework…”
An effective IP enforcement regime – and the UK’s is one of the best in the world  – is a necessity for
any advanced economy.  The Government shares the Review’s perspective that intellectual property
rights (IPRs) cannot fulfil a useful function unless they are enforceable. There are two main implications of this view:

  • There is a fundamental reason to ensure that valuable IPRs are enforceable, and
  •  Where society – both users and owners – acknowledges in practice that the enforcement

of rights is uneconomic or unreasonable, for example over private copying, these should ideally be taken out of scope of the IP system through properly limited exceptions.  Otherwise respect for legitimate enforcement is diluted.

  • Action against IP crime will remain a priority
  • Serious organised crime will be the leading priority within finite public resources
  • Content owners should continue to inform, educate and guide consumers
  • Government and public sector enforcement bodies will work with industry, with a particular focus on supporting efforts to develop new legitimate digital markets, tackling organised IP crime and enhancing the availability of high-quality evidence.
  • it would be desirable for Ofcom to begin establishing benchmarks and data on trends in online infringement of copyright as soon as possible.
  • The Government is publishing alongside this document a cross-government IP Crime Strategy that commits us to better coordinated action to make the most of scarce resources, including on online infringement of copyrights and trade marks.  Progress on the strategy will be reported in annual IP Crime reports from summer 2012 onwards.
  • The Government is also publishing today a statement setting out how it plans to move forward with implementation of the Digital Economy Act initial obligations, following a successful defence of the Act’s provisions in judicial review.  Following the judicial review ruling, the Government is removing the obligation on internet service providers (ISPs) to contribute towards the costs of Ofcom and the independent appeals body in setting up and administering the regime (bit not other costs).  The Government has received further advice from Ofcom on the potential costs of the DEA appeals system, which we are publishing today.  In order to minimise the risk of the system being disrupted by vexatious or non bona fide appeals, we are introducing a £20 fee for subscribers to appeal. The fee will be refunded if the appeal is successful.
  • The Government will, subject to establishing the value for money case, introduce a small claims track in the Patents County Court for cases with £5000 or less at issue, initially at a low level of resource to gauge demand, making greater provision if it is needed.  It may also rename the Court the Intellectual Property County Court.
  • Following advice from Ofcom – which the Government is publishing today – site blocking will not be brought forward at this time.  However, the Government is keen to explore the issues raised by Ofcom’s report and will do more work on what other measures can be pursued to tackle online copyright infringement.

And progress is already happening! At the end of August the UK Intellectual Property Office and the Crown Prosecution Service announced the CPS was training 350 CPS prosecutors were being specially trained to build successful cases against counterfeiters and pirates and Minister for Intellectual Property Baroness Wilcox said “The initiative will give prosecutors the most up to date information so they can successfully deal with intellectual property criminals. These offences are not victimless crimes. They have a detrimental effect on consumers, businesses, the economy and growth. Consumers are likely to receive poor quality or even unsafe products that simply aren’t worth the price” adding rather tellingly “There are huge events coming up in the UK such as the London 2012 Olympic and Paralympic games. There will no doubt be people looking to sell counterfeit goods using trade marks associated with the games” although as a sop to the consumer added “ more needs to be done to tackle the criminals who cheat consumers into buying fake goods online at auction websites for example. The training includes a module for prosecutors specifically about these crimes. This will help the CPS tackle emerging threats to businesses and consumers online”.

“Creating an IP framework which adapts to changes in technology and markets requires changes to the IPO…”
The Government is committed to policies based on sound evidence and to the transparent operation of public bodies.  The Review found past decisions on IP did not always live up to this standard, apparently influenced by strong lobbying from interested parties.  The Government believes it is important to avoid not only the fact but also the appearance of bias and therefore believes there is a good case for change to the IPO that will support more evidence-based decisions in future. The Government will explore options for a future role for IPO that involves a strengthened  focus on innovation and growth, a greater  emphasis on publicly available evidence, enhanced ability to promote competitive markets whilst retaining Ministerial oversight of IP policy; and will bring forward these proposals by the turn of the year (i.e. late 2011 or early 2012).

A House of Commons Select Committee is taking the Hargreaves Review (and the UK government’s responses to it) to the next stage, according to Parliament’s website. The Business, Innovation and Skills Committee has announced its intention to conduct an inquiry into the Hargreaves Review of Intellectual Property and the Government’s response to that Review. The Inquiry will focus on:  The recommendations set out in the Hargreaves Review on Intellectual Property and the Government’s plans for the implementation of its recommendations. The Committee will be reviewing the submissions made to the Hargreaves Review and requests that evidence be confined to points not already made in those submissions.

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