Adopting IP proposals would benefit UK economy, IPO report says

In May a Government-commissioned review of the UK IP framework made 10 proposals, including changes to existing IP laws and practices and the adoption of new systems, that it said would boost economic growth in the UK.

The proposals included liberalising the use of 'orphan works', which are copyrighted works where the author cannot be identified, and permitting copyrighted content to be transferred between mediums, which is currently illegal under UK law. The review also proposed that a digital copyright exchange should be established, where works could be licensed for use via a central hub, and said the backlog of cases in the patent system had to be cleared out.

Earlier this month the Government officially responded to the review and said that it was "broadly in agreement" with the report's findings.

A report by the IPO into the economic impact of implementing the recommendations said that the UK economy could grow by up to £7.9 billion annually if the Government adopted the proposals it was able to calculate a growth figure for. The UK could also make annual savings of up to £780m from making the quantifiable changes, the IPO report said.

"We present these figures as conservative estimates, given available research," the IPO's economic impact report (54-page / 510KB PDF) said.

"Growth estimates will also depend on further work, yet to be done, on detailed policy design. Implementation costs for the recommendations have yet to be determined. Most will be small when compared to the estimated benefits. The largest is likely to be the development of a digital copyright exchange," the report said.

The report said that a new digital copyright exchange could help grow the UK economy by up to £2.2bn a year by 2020, and that rights holders would benefit from the new system.

"If the licensing process becomes more efficient it is difficult to see how rights owners are likely to lose," the report said.

"One outcome should be that as deadweight administrative costs fall, and content becomes accessible to more distributors, returns to creators could increase," it said.

Collecting societies, which control the licensing of copyrights for some authors in industries such as film and music, should have to abide by a new code of practice to ensure that money they collect is transparently disclosed, the report said.

"A higher level of transparency ... is likely to improve accountability and efficiency, which could lead to a narrowing of the differential in administrative fees charged by different collecting societies," the report said. "This means that there could be increased levels of competition ... which is likely to have a positive impact on growth," it said.

Allowing orphan works to be legally used will boost the economy because the works can often add value to other works they are combined with, the report said.

"The value is often not in single pieces of work, but the ability to combine multiple items whereby the aggregate has a value," the report said. "That suggests value adding activity of between £100m - £250m per annum, plus the contributions to museums and archives of £30 - £60m per annum," it said.

The Government should deliver copyright exceptions at national level to realise all the opportunities within the EU framework, including 'format shifting', the report said.

Format shifting is the process of transferring copyrighted content between different storage formats, such as copying music from a CD onto an iPod. This process is currently illegal under UK copyright law, but exceptions within EU law allow countries to exempt format shifting from being an illegal act under national laws.

The IPO said that taking advantage of the exemption rights would help "enable the expansion of new markets for products and services" and grow the economy by up to £2bn a year.

"Format shifting within music has already led to creation of new global markets worth tens of billions of pounds of sales for products as well as billions for digital content in music alone," the report said.

"UK firms were unable to initiate this type of innovation because of the private copying restraints. With a suitably drawn exception, the scope for UK businesses to create products to support new digital content services would be widened," the report said.

Format shifting rights would also provide cost savings for UK archivists, such as libraries, that cannot currently digitise some copyrighted content under UK law, the report said.

UK copyright law has limited exemptions to copyright applying for 'fair dealing' in rights-protected material, which permits the use of content in news reporting or for criticism or review, amongst other things.

Extending the copyright law exceptions to include parodying of works would also have a "positive" effect on the UK economy, the IPO report said.

"How far this exception can remove the barriers to a British show becoming a global success is a probability question," the report said. "Today the chance is zero, so this would be a positive change," it said.

"Even if the comedy market is only worth one per cent of the global entertainment market (probably an under estimate) it is possible the UK would gain one per cent of this market with one or two successes under a comedy exception, and up to five per cent if it enabled a global hit," the report said.

The UK would reap social and economic benefit from "freeing up technological developments from copyright constraints", the IPO said.

The Government should also ensure that any new laws ensure that license agreements do not override any current and new copyright exemptions set out in law, the report said 

The UK should take an international lead to help coordinate how patent protection is obtained to help reduced backlogs in the UK, the IPO report said.

"If the UK continues to lead, and is seen to lead, in efforts to reduce and understand backlogs, it may over time reap the full benefit of backlog reduction in the major offices and across the world," the report said.

If inventors are able to obtain a single patent that offers protection across the EU it would save them more than €13,000 of the cost they currently incur for the same level of protection, the report said.

At the moment obtaining Europe-wide patent protection is only possible by validating a patent registered with the European Patent Office in each individual country. To be valid in a country a patent must be translated into its language. The UK and 24 other EU member states, together with the European Commission, are currently trying to set up a cheaper system for obtaining a unitary patent that cuts what the Commission has said is the prohibitive cost of the translation process.

The report said that a "positive, though unquantifiable, impact" on growth would be achieved if the Government obtained evidence to substantiate IP policies and that establishing a more adaptive IP system that would take into account future technology was also "likely to have a beneficial impact on innovation and growth".