Hargreaves Report Envisions Changes in British Intellectual Property Regime

Article  by  Dovilé DAVELUY  •  Published 24.06.2011  •  Updated 24.06.2011
Released on May 18, the Hargreaves Report on the intellectual property regime in Britain concludes that the current system is inadequate for the digital era, and recommends changes that will allow for less rigid copyright laws and encourage the innovation and growth of digital businesses.
An inquiry into the British intellectual property system was ordered by Prime Minister David Cameron, and led by Professor Ian Hargreaves, Chair of Digital Economy at the Cardiff School of Journalism.
The report brings into light a number of deficiencies in the present system. First, it suggests that in the digital environment, where communication technologies involve the routine copying of text, images and data, restrictive copyright laws “act as a regulatory barrier to the creation of certain kinds of new, internet based businesses”. Further glaring proof of the system’s inefficiency is the law forbidding “format shifting”, which, for example, makes the downloading of a legally purchased CD onto an MP3 player technically illegal. Although no British citizens have been brought to court for this type of misdeed, the report insists that “the copyright regime cannot be considered fit for the digital age when millions of citizens are in daily breach of copyright, simply for shifting a piece of music or video from one device to another”.
Parody has also been obstructed by the current copyright restrictions. Music and technology fans were scandalized after the last year’s viral hit Newport State of Mind, parodying Alicia Keys and JayZ’s single New York State of Mind, was pulled off YouTube because the writers of the original song declined to grant permission for this use of their IP rights. Many replicas of the original parody can still be seen on YouTube.
The report also addresses problems related to the use of “orphan works” (works whose original copyright owners cannot be traced), patent proliferation, and design rights and innovation. Hargreaves concludes that copyright laws must be updated by balancing “economic objectives against social goals and potential benefits for right holders against impacts on consumers”.
According to Hargreaves, despite its evident flaws, the current regime has persisted because “lobbying on behalf of right owners has been more persuasive to Ministers than economic impact assessment”. John Naughton, a professor specialized in the public understanding of technology at the Open University, confesses in an article in the Guardian that some had feared that Hargreaves would also be “pressured into being more sensitive to the needs of hard-pressed pop stars and their agents”. Instead, what Hargreaves has provided, Naughton concludes, is an intelligent and cutting analysis of the current regime, laying bare “the stupidity” of the archaic copyright laws.
Hargreaves emphasizes that the report’s findings are grounded in economic evidence, and insists that the policies outlined should also be driven by economic incentives. The report states that if the proposed recommendations are implemented, annual GDP could be expected to grow by an additional 0.3–0.6%. Business Secretary Vince Cable applauded the report for demonstrating the clear link between IP and potential economic growth. Judith Wilcox, Minister for Intellectual Property, expressed her delight in saying that the report offers “the chance of a future with a developing market for Britain's creative talent, where the value of innovation and research outweighs the fear of piracy and counterfeiting”.
To counter the ultimate argument of rights owners – namely, copyright piracy – the report notes that there is very little reliable data regarding the scale of illegal downloads. It therefore concludes that “many creative businesses are experiencing some turbulence from digital copyright infringement, but that at the level of the whole economy, measurable impacts are not as stark as is sometimes suggested”. Moreover, the report suggests that if such trivial issues as format shifting are eliminated, the government will be able to focus all of its resources on tackling more fundamental problems, such as web piracy.
In terms of copyright regulations, the report strongly warns against the “over-regulation of activities which do not prejudice the central objective of copyright, namely the provision of incentives to creators”. It suggests that Britain should take advantage of all EU-sanctioned copyright exceptions. This means allowing the heretofore forbidden practices of format shifting, parody, non-commercial research, library archiving, and data mining for medical research. Hargreaves goes a step further in suggesting that the UK should lead the EU in developing a further copyright exception designed to increase adaptability in terms of new technologies.
The report envisions creating a Digital Copyright Exchange, which would function as a “one stop shop” for licenses. This digital marketplace would make the processes of selling and buying licenses faster, more automated and cheaper. Songwriter Helienne Lindvall, who considers the report “fairly balanced”, agrees that the digital marketplace is a great idea, but notes that the implementation process will be arduous due to the amount of information that needs to be collected in a single database.
The Digital Copyright Exchange would also help solve the problem of orphan works. Hargreaves proposes the establishment of collective licensing for the mass licensing of orphan works, and a clearance procedure for the use of individual works. Moreover, he suggests that a work should be considered as an orphan only if it cannot be found in databases involved in the proposed Digital Copyright Exchange. Although the exact economic impact of allowing the usage of orphan works is impossible to establish, the British Film Institute estimates that if legal provisions enabled it to trade in orphan works, this could generate an additional annual gross income of more than £500,000. Hargreaves concludes that there is no economic downside to enabling the use of orphan works that, according to the report, represent a “vast treasure trove” in which some “real discoveries” might be made.
Hargreaves also addresses the issue of patent proliferation. The report explains that due to technological pressures, there has been a striking increase in the number of patent applications, leading to delays in the granting process and patent office backlogs. Moreover, in certain sectors, notably that of computer programs and telecommunications, patent proliferation is causing regulatory blockage in the form of so-called “thickets” of pre-existing patents and pending patents, which prohibits innovators wishing to enter markets from doing so. The main proposed solution involves international cooperation and the readjustment of patent fee structures to eliminate some low-value patents.
Other Hargreaves recommendations entail the reassessment of the role of IP in the design industry, where it has been neglected, or even putting in place effective enforcement mechanisms for the updated IP laws. The reports envisions the new rights and responsibilities of the Intellectual Property Office that should oversee the enforcement of the laws and make sure that the IP system promotes innovation and is responsive to change. The IPO, the report also suggests, should be given the right to issue statutory opinions to clarify the copyright laws when necessary.
So far, the reactions to the report have been quite positive. In a Guardian article, Peter Bradwell, a campaigner at the Open Rights Group, congratulates Professor Hargreaves for, as he puts it, “pulling off the impossible: pleasing everybody”. Various concerned parties indeed seem to be quite convinced by the utility of the proposed changes. Dame Lynne Brindley, chief executive of the British Library, noted, for example, that the “recommendations, including those relating to the digitization of orphan works, text and data mining, and digital preservation will have an immediate benefit for research, lifelong learning and teaching”. Mike O'Connor, chief executive of Consumer Focus, suggested that allowing format shifting in Britain would be “fantastic news for customers”. Many concerned players have also welcomed the idea of the Digital Copyright Exchange, the simplification of licensing procedures and the potential benefits that these could bring about for the innovation and development of new businesses.
Right holders sighed with relief after learning that Hargreaves rejected what they had feared most: the possibility of importing the American concept of “fair use”, which allows for significant portions of a work to be replicated without permission for certain usages. Companies such as Google and YouTube have exploited this law to build their digital aggregation websites without receiving permission to use copyrighted materials. Google, however, has been accused of copyright infringement numerous times. Although David Cameron seemed to have quite a positive outlook towards the American “fair use” doctrine, perhaps influenced by his friendly relationship with Google, the report concluded that “importing Fair Use wholesale was unlikely to be legally feasible in Europe”.
The main question now is whether the British government will act upon Hargreaves’s recommendations. Observers point to the 2006 Gowers Review of Intellectual Property, which made some similar recommendations – most of which, however, have been simply disregarded. Peter Bradwell from the Open Rights Group suggests that we can only hope that the good work of Professor Hargreaves and his team “does not go to waste”.
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