Copyright law must focus on industry not creators' rights, says Government report

Out-Law News | 18 May 2011 | 2:21 pm | 4 min. read

UK industry has been damaged because copyright law has been too focused on the rights of creators, a Government-commissioned report has said. Copyright law restricts important industrial growth and must change, the report said.

The law hampers innovation and medical research according to a review of intellectual property (IP) law conducted by Cardiff University professor Ian Hargreaves.
The Review of Intellectual Property and Growth, published this morning, said that current laws are not fit for the digital era.

"Could it be true that laws designed more than three centuries ago with the express purpose of creating economic incentives for innovation by protecting creators’ rights are today obstructing innovation and economic growth? The short answer is: yes," said Hargreaves in his introduction to the report (130-page / 1.1MB PDF).

Hargreaves said that businesses involved in research and development are being hindered by "patent thickets" that "obstruct entry to some markets and so impede innovation". He also said that industries based on designs should be better protected by IP law.

Currently, designers are protected by design rights, which are different to copyright. Hargreaves said in his report that the design industry's IP needs "had been neglected".

"Designers believe a patchwork of intellectual property right (IPR) provision puts them at a disadvantage in comparison with sectors fully covered by copyright law," he said. "With the emergence of fabrication through 3D printing, new technological challenges also arise, indicating the need for a thorough reassessment of IP and design."

Business lobby group the CBI said that any action on patent and design rights must not risk undermining the rights of patent holders.

"While we accept that these can present barriers to innovation and growth, the Government must be careful to avoid action that will penalise genuine patent clusters and the risk of undermining investment in these important industries," said Katja Hall, chief policy director of the CBI.

The report recommends that the Intellectual Property Office (IPO) consult with the design industry on whether it should be included in his proposed copyright exchange system.

Hargreaves has proposed a copyright exchange in which owners of copyrighted material could make licences to that material available in a standardised way. He said that it would make it easier for users of copyright material to obtain the right licences and encourage legal use of copyrighted content.

"This will make it easier for rights owners, small and large, to sell licences in their work and for others to buy them," the report said. "It will make market transactions faster, more automated and cheaper. The result will be a UK market in digital copyright which is better informed and more readily capable of resolving disputes without costly litigation."

The exchange would be an online mechanism that would improve the prospects for the UK's creative industries across the world, the report said. It would also make it easier for small companies and new entrants to the copyright market to establish themselves, the review said.

"The prize is to build on the UK’s current competitive advantage in creative content to become a leader in providing the services global players use to license their content for world content markets," it said.

Like the author of the last major review of IP policy, Andrew Gowers, Hargreaves has said that individuals should be allowed to change the medium on which they play music they have bought. They should, for example, be able to save music from CDs to computers or music players.

The fact that copyright law stops the 'format shifting' of content is leading to much material "rotting away", he said. EU law allows countries to exempt format shifting from copyright law and the UK should take that opportunity, he said.

"The UK [does not] allow its great libraries to archive all digital copyright material, with the result that much of it is rotting away," the report said. "Taking advantage of these EU sanctioned exceptions will bring important cultural as well as economic benefits to the UK. Together, they will help to make copyright law better understood and more acceptable to the public. In addition, there should be a change in rules to enable scientific and other researchers to use modern text and data mining techniques, which copyright prohibits."

Hargreaves did not recommend that the UK adopt a US-style 'fair use' approach to copyright material that allows works to be reproduced for reporting or comment purposes. The approach was unlikely to be "legally feasible" in Europe, the report said.

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

"Hargreaves’ decision not to recommend an American-style ‘fair-use’ defence to copying works is good for rights holders and entrepreneurs alike," said IP law specialist Iain Connor or Pinsent Masons, the law firm behind OUT-LAW.COM. "Leaving law making to litigation by asking judges to decide whether copyright use constitutes ‘fair use’ or not was not going to assist anyone but the rich."

Hargreaves said that the Government should solve once and for all the problem of 'orphan works', copyrighted material that cannot be used because its creator is unknown. "[This] represents the starkest failure of the copyright framework to adapt," said the report.

"As long as this state of affairs continues, archives in old formats (for instance celluloid film and audio tape) continue to decay, and further delay to digitisation means some will be lost for good," said the report. "Beyond this cultural negligence, the unnecessary restriction on access involved in orphan works can, when applied to scientific papers, even affect life saving research ... action on this issue cannot be deferred any longer."

The report proposes that any material whose owner cannot be found in the online copyright exchange can be considered to be an orphan work. A system of collective licensing should be established which would collect royalties for the use of that work, the report said.

"The aim to grant easier and quicker access to copyright for SMEs and include access to ‘orphan works’ should assist everyone to stay on the right side of the law," said Connor. "It will be interesting to see how this operates in practice and whether the rights holders will be persuaded or even compelled to move away from their own copyright management and licensing systems."

The proposals were welcomed by digital rights lobby group the Open Rights Group.

"Professor Hargreaves has given us the design manual to a 21st century copyright policy," said group spokesman Peter Bradwell. "He shows that we can allow useful activities like new medical research techniques or parodies and maintain flourishing creative industries. This evidence-based blueprint should finally help government balance copyright in the interest of creators, consumers and innovators. It is vital they follow it."

Technology law news is also available from Bootlaw, a free resource for technology start-ups, with regular events hosted by Pinsent Masons.