Hargreaves Review Published

May 17, 2011

The Review makes 10 recommendations designed to ensure that the UK has an IP framework best suited to supporting innovation and promoting economic growth in the digital age. More details will follow. 

The key recommendations are:

  • the UK should have a ‘Digital Copyright Exchange’: a digital market place where licences in copyright content can be readily bought and sold, a sort of online copyright shop.
  • the Government should legislate to permit access to orphan works, where the owner cannot be traced. For example some copyrighted works remain locked away because their authors either aren’t known or can’t be traced to give permission for use. In the worst cases, where one owner cannot be located – just one out of hundreds contained in a film or TV programme – they can effectively hold the interests of others to ransom as it becomes a criminal offence to exploit that work commercially.
  • updating what it is lawful to copy. This includes copying for private purposes (such as shifting music from a laptop to an mp3 player) and copying which does not conflict with the core aims of copyright – for example, digital copying of medical and other journals for computerised analysis in research. For example an academic working on malaria cannot draw on previous research through data mining because they cannot get permission to copy the datasets they need to mine.
  • the Government’s IP policy decisions need to be more closely based on economic evidence and should pay more attention to the impact on non-rights holders and consumers;
  • changes to the Intellectual Property Office’s (IPO) powers to enable it to help the IP framework adapt to future economic and technological change.

Professor Hargreaves said:

‘In recent years, the UK has failed to make the changes needed to modernise copyright law, for which we will pay an increasing economic price as we make our way into the third decade of the commercial internet. My recommendations set out how the IP framework can promote innovation and economic growth in the UK economy. The recommendations of the review are designed to enhance the economic potential of the UK’s creative industries and to ensure that the emergence of high technology businesses, especially smaller businesses, in other sectors is not impeded by our IP laws.’


Emily Devlin, IP Lawyer at Osborne Clarke expressed her view that the review is an exciting opportunity, but that there are many challenges to overcome before its recommendations can be implemented. Businesses will remain unconvinced until they see changes happening:

‘In a digital economy IP is one of the most important assets a business can hold, so it’s crucial that this time we get the rules right. While many of the report’s recommendations appear to be a step in the right direction, businesses will be wary as many similar recommendations were made and not implemented in the discarded Gower review. If the government drags its feet on implementing the review’s recommendations, companies could lose faith in the UK regime and look to relocate abroad. Ideas such as the Digital Rights Exchange, could be great for UK businesses but getting the Exchange off the ground will require the co-operation of many different parties, not least film companies, record labels and publishers. That’s going to involve some complex negotiations. While fair use and format shifting make great headlines for consumers, businesses will be looking for signs that the political will is there to transform the recommendations into measures that will revolutionise their ability to launch and grow in the UK.’

Mark Owen, head of the intellectual property practice at Harbottle & Lewis, said: 

‘The Review seems to be careful and balanced, it is unlikely to frighten rights-owners while managing to identify a number of areas where IP rights and their management can be improved. In its proposal for a Digital Rights Exchange based in the UK it also has one big new idea. Most of the sectors the report affects, whether creators, owners or users of rights will find things to quibble with. Some of its proposals are not feasible, or are not much more than good intentions. It is also determinedly non radical, which will disappoint some who expected big immediate changes. But it is important to remember that this is a prospectus, which lays out the scope of what should be looked at, but with plenty of scope still for detailed policy consideration and argument. And the report’s approach recognises that simplistic broad strokes are difficult to make in the complex, and interconnected world of IP.

The people who face the most challenges from the report are the government, as Hargreaves repeatedly makes the point that the changes he advocates have to be brought about through serious governmental effort and application. This may not be what the government were after and much of this work will be costly. When David Cameron set the review up he made much of the benefits he saw from introducing a fair use right and cynics detected in this an attempt to appear pro innovation without the government having to do much, in particular not spend money such as through tax breaks. As plenty of commentators said at the time, EU law would not allow this. Hargreaves has echoed that and dismissed the possibility of a fair use law. Instead he has listened and listed a large number of less radical changes government must consider.

The changes he suggests to basic copyright law are relatively minor. The suggestion of a format shifting right was widely predicted, not least as the previous government had said it would introduce such an exception in 2006 but never managed to do so. A parody right is also given another outing despite having recently been considered in detail by a government review and rejected. Perhaps the most important idea is that the UK should introduce the same exceptions to copyright as the rest of the EU. Bringing our law more into line internationally is worth considering. From the perspective of important trading partners such as the US and the EU much about UK copyright law seems odd and out of step, and this costs us.

Many of the review’s suggestions are around copyright licensing. It will be interesting to see whether government can actually do anything here, other than encourage existing negotiations to continue. There are good ideas in other areas, such as the often overlooked field of design protection, where the laws are an impenetrable thicket and do little to help anyone. The idea of a small claims IP court is also a good one. Even for large companies UK litigation is expensive, especially compared with Germany which has more sensible answers to many IP issues.

Will the Review end up making any difference? The Gowers Review of IP in 2006 was also well-written and thought out, with many interesting proposals. Many of the easy ones were eventually implemented but plenty were ignored by government. Hopefully this time the government will do more and will learn from the Gowers experience, so we are not having yet another trumpeted review of IP in 5 years time.’

Gregor Grant, Partner at Marks & Clerk Solicitors, commented:

‘Copyright licensing is a minefield.  A single work can have several rights owners, each owning different slices of the pie.  The digital revolution has made it yet more difficult for anyone who wants to broadcast – or even play – works such as music.  The problem is self-evident; the solution is not. The report identifies and analyses the problem.  It points a finger in the direction of a solution, which is a centralised digital registry, allowing people to use copyrighted works for a fee – a bit like a scaled-up version of the Performing Rights Society but not limited to music alone.  But it does not hand out a packaged solution.   These days, no national government can hope to do anything significant with copyright law unilaterally.  There are simply too many international conventions, plus the fact that much of European copyright law has to adhere to a common format.

The more practical suggestions offered by the report – such as the maximization of our use of the exceptions of EU law to permit format shifting and data-mining for scientific research – are potentially helpful, but these are rather minor reforms and do nothing to address some of the more persistent problems inherent in the current system.

All this review can hope to achieve is highlight the problem, the importance of a solution, and offer encouragement to government to invest time and energy into taking a lead.  Global copyright licensing is big business – £600 billion a year at the last count, which is around five per cent of all world trade.  The UK is in a good position to take a lead – digital creative works and licensing are our third largest export sector.’

Hargreaves Review Recommendations

1. Evidence. Government should ensure that development of the IP System is driven as far as possible by objective evidence. Policy should balance measurable economic objectives against social goals and potential benefits for rights holders against impacts on consumers and other interests. These concerns will be of particular importance in assessing future claims to extend rights or in determining desirable limits to rights.

2. International priorities. The UK should resolutely pursue its international interests in IP, particularly with respect to emerging economies such as China and  India, based upon positions grounded in economic evidence. It should attach the highest immediate priority to achieving a unified EU patent court and EU patent system, which promises significant economic benefits to UK business. The UK should work to make the Patent Cooperation Treaty a more effective vehicle for international processing of patent applications.

3. Copyright licensing. In order to boost UK firms’ access to transparent, contestable and global digital markets, the UK should establish a cross sectoral Digital Copyright Exchange. Government should appoint a senior figure to oversee its design and implementation by the end of 2012. A range of incentives and disincentives will be needed to encourage rights holders and others to take part. Governance should reflect the interests of participants, working to an agreed code of practice. The UK should support moves by the European Commission to establish a framework for cross border copyright licensing, with clear benefits to the UK as a major exporter of copyright works. Collecting societies should be required by law to adopt codes of practice, approved by the IPO and the UK competition authorities, to ensure that they operate in a way that is consistent with the further development of efficient, open markets.

4. Orphan works. The Government should legislate to enable licensing of orphan works. This should establish extended collective licensing for mass licensing of orphan works, and a clearance procedure for use of individual works. In both cases, a work should only be treated as an orphan if it cannot be found by search of the databases involved in the proposed Digital Copyright Exchange.

5. Limits to copyright. Government should firmly resist over-regulation of activities which do not prejudice the central objective of copyright, namely the provision of incentives to creators. Government should deliver copyright exceptions at national level to realise all the opportunities within the EU framework, including format shifting, parody, non-commercial research, and library archiving. The UK should also promote at EU level an exception to support text and data analytics. The UK should give a lead at EU level to develop a further copyright exception designed to build into the EU framework adaptability to new technologies. This would be designed to allow uses enabled by technology of works in ways which do not directly trade on the underlying creative and expressive purpose of the work. The Government should also legislate to ensure that these and other copyright exceptions are protected from override by contract.

6. Patent thickets and other obstructions to innovation. In order to limit the effects of these barriers to innovation, the Government should: take a leading role in promoting international efforts to cut backlogs and manage the boom in patent applications by further extending ‘work sharing’ with patent offices in other countries; work to ensure patents are not extended into sectors, such as non-technical computer programs and business methods, which they do not currently cover, without clear evidence of benefit; investigate ways of limiting adverse consequences of patent thickets, including by working with international partners to establish a patent fee structure set by reference to innovation and growth goals rather than solely by reference to patent office running costs. The structure of patent renewal fees might be adjusted to encourage patentees to assess more carefully the value of maintaining lower value patents, so reducing the density of ‘patent thickets’.

7. The design industry. The role of IP in supporting this important branch of the creative economy has been neglected. In the next 12 months, the IPO should conduct an evidence based assessment of the relationship between design rights and innovation, with a view to establishing a firmer basis for evaluating policy at the UK and European level. The assessment should include exploration with design interests of whether access to the proposed Digital Copyright Exchange would help creators protect and market their designs and help users better achieve legally compliant access to designs.

8. Enforcement of IP rights. The Government should pursue an integrated approach based upon enforcement, education and, crucially, measures to strengthen and grow legitimate markets in copyright and other IP protected fields. When the enforcement regime set out in the DEA becomes operational next year its impact should be carefully monitored and compared with experience in other countries, in order to provide the insight needed to adjust enforcement mechanisms as market conditions evolve. This is urgent and Ofcom should not wait until then to establish its benchmarks and begin building data on trends. In order to support copyright holders in enforcing their rights the Government should introduce a small claims track for low monetary value IP claims in the Patents County Court.

9. Small firm access to IP advice. The IPO should draw up plans to improve accessibility of the IP system to smaller companies who will benefit from it. This should involve access to lower cost providers of integrated IP legal and commercial advice.

10. An IP system responsive to change. The IPO should be given the necessary powers and mandate in law to ensure that it focuses on its central task of ensuring that the UK’s IP system promotes innovation and growth through efficient, contestable markets. It should be empowered to issue statutory opinions where these will help clarify copyright law. As an element of improved transparency and adaptability, Government should ensure that by the end of 2013, the IPO publishes an assessment of the impact of those measures advocated in this review which have been accepted by Government.