Hargreaves review: the government responds

The government's response to Professor Ian Hargreaves' review on intellectual property and growth largely supports Hargreaves’ recommendations, but asks more questions than it answers.

These are heady days for British copyright lawyers, with copyright law facing more changes in the last month or so than since 1988. A string of high-profile court judgments (see box "Recent cases") have been accompanied by some important policy developments. Several of these come out of Professor Ian Hargreaves' review (the review), published in May 2011, on intellectual property (IP) and growth (www.practicallaw.com/7-506-6394).

The government's response (the response), published on 3 August 2011, largely supports Hargreaves' recommendations, but asks more questions than it answers.

The need for change

Our existing copyright law is constantly criticised for failing to adapt to rapid changes in technology, so much so that there have been five government reviews of it in the last six years. Would the latest review, launched with the aim that the UK might begin to emulate the entrepreneurial success of Silicon Valley, simply be more of the same: much trumpeted, sending industry lobbyists into a spin and then making little lasting impact (www.practicallaw.com/1-504-0514)?

In the event, the review was welcomed for being rather more sane and considered than many had feared. Ultimately, most of its recommendations were not for radical legal change, but for work on structural and administrative issues.

The response

The response takes Hargreaves' themes on as follows:

IP is important to growth. It is unclear if the response here amounts to much more than a "note to self". Little is said about what this may mean in terms of policy, other than that barriers should be reduced for "viable IP-using small firms", that IP-led business sectors must not be put at risk, and that opportunities should not be missed. All of these aims sound laudable, but, in reality, they may conflict with each other at a detailed level.

The IP framework must adapt. Again, there is not a lot of policy "meat" here; in practice, the IP framework can never precisely reflect technological change, and so is designed to be flexible and technology-agnostic. The question is really whether it is flexible enough. The government clearly thinks it is not, hence the rest of these proposals.

Evidence should drive policy. On the face of it, this is another good thing, but it is not clear what change the government has in mind. There was no shortage of detailed submissions made to Hargreaves, or to earlier reviews, from a broad range of interested parties, but where is the line between evidence and lobbying (or "lobbynomics", as Hargreaves put it)?

Unless the government abandons the "ruling by consultation" approach that has dominated policy-making for years, and without the resources for large research teams of its own (one of the first victims of the government's bonfire of the quangos was SABIP (the Strategic Advisory Board for intellectual property), which provided research to the government on just these sorts of IP issues), will the government fall back onto the "guess and get on with it" approach, which it refers to with approval in the response? It is to be hoped not.

Facilitating licensing. Hargreaves' most eye-catching idea was the establishment of a digital copyright exchange (DCE), through which rights could be licensed easily and quickly. The idea builds on moves already afoot in the music industry, and perhaps on what Google has been trying to enable in the publishing market through the Google Books project.

While the government wants to encourage the idea, it does not know yet how the DCE will work, which copyright works it will cover, and who will run and fund it, other than that it will not be the government. It contemplates some form of free market model along the lines of the Amazon marketplace. How that model will translate to the sale of rights, where there are not multiple sellers competing on price but one rightsowner with the right to license or not, and at the price it sets, is not addressed. While not quite a white elephant, this proposal is still in its very early stages.

Modernising copyright licensing. The main new government proposal is in relation to orphan works (that is, works whose copyright owner cannot be traced, and so which cannot be licensed). In practice, this is an issue of quite narrow commercial interest, but it is important culturally as it makes it difficult for libraries to preserve their collections of older works by making copies of them. The government promises a detailed proposal in autumn 2011.

Copyright exceptions. This is by far the most controversial issue considered in the review. The government concludes that the UK should have the widest possible exceptions to copyright that EU laws permit. In practice, this may mean new and potentially far-reaching exceptions for private use (recommended, but never implemented, by the previous government) and for parody (which was rejected following a consultation in 2010 (www.practicallaw.com/2-501-3001)). The government also wants to allow non-commercial research, including text and data mining.

Precisely how the government intends to frame any copyright exception, and how it will be controlled and policed, is not clear. Are we now to look at whether any particular exception benefits the public, or whether any act restricted by copyright has no direct commercial benefit? And, if so, who is the arbiter?

International laws. It will be particularly interesting to see the government's detailed policy intentions on international IP law. Although so much of our IP law is now EU law-based that our courts frequently refuse to look at UK legislation at all, there are still surprisingly large discrepancies between EU member states.

Although the government recognises that there are differences, it does not go so far as to say that it wants to pursue harmonisation across the board. Whether it comes to see this as both useful, and inevitable, remains to be seen.

The government says that it wants to open up the EU's approach to copyright exceptions much more, so as to enable new technology-based business models (in effect bringing us more into line with the US approach). This will be a long and controversial process but, if successful, it may prove to be the most significant change that results from this exercise.

Patents and designs. While Hargreaves mainly addressed copyright law reform, he also proposed improvements to the "thickets" of patent and design law. Both will be addressed by the government, including a renewed push for a truly European patent system.

Design law also needs a root and branch review, but the government has not yet made it clear whether it has the stomach for it.

Effective enforcement. The government bemoans the current state of enforcement of IP rights, and goes some way to recognising the problems that rights owners face. However, apart from some steps promised on IP crime, there is not much here for larger rights owners, and, indeed, new mechanisms under the Digital Economy Act 2010 to block infringing sites have been dropped for the time being.

There is some help for SMEs with the idea of an IP small claims court, as well as assistance with finding IP advice.

A name change. Echoing one of the more lasting changes effected by the last major IP review (led by Andrew Gowers in 2006, who proposed a name change for the relevant government department to the "UK Intellectual Property Office" (www.practicallaw.com/7-202-1525)), the government is considering changing the name of the Patents County Court to the "IP County Court", although even this is not yet a firm proposal. Most people involved in IP will hope that this will not be the only lasting change from the current exercise.

Next steps

Several developments can be expected this autumn: action plans, more detailed government responses and the launch of new consultations, with a white paper proposed for spring 2012.

The review and the response set the scene for what promises to be an intensive period of policy development, to which any organisation involved with digital business and rights should pay close attention.

Mark Owen is a partner at Harbottle & Lewis LLP.

The Government Response to the Hargreaves Review of Intellectual Property and Growth, www.ipo.gov.uk/ip response-full.pdf.