Intellectual property reform worth £7.9 billion!

In November 2010, David Cameron charged Professor Ian Hargreaves, Professor of Digital Economy at the Cardiff School of Journalism, Media and Cultural Studies, with the task of leading an independent review of the issues surrounding Intellectual Property in the UK. His report was published in May 2011. In the introduction, Hargreaves’ wrote, “The review was needed, the PM said, because of the risk that the current intellectual property framework might not be sufficiently well designed to promote innovation and growth in the UK economy.” In other words, check this stuff out mate, because BrandUK is going to need something other than banking for its income pretty quick smart.

Hargreaves’ review deduced that, yes, “the UK’s intellectual property framework, especially with regard to copyright, is falling behind what is needed.” And he concluded his executive summary with the following: “If the review’s recommendations are acted upon, the result will be stronger rates of innovation and increased economic growth”. Growth that he estimated to be between 0.3 per cent and 0.6 per cent of annual GDP growth (that’s upto £7.9 billion!), albeit with the caveat “subject to the high degree of uncertainty inherent in such projections” adding, “The path laid down in this review would also, over time, mean that IP law, including copyright law, would become clearer and be observed by most people without controversy.”

So, I read the report and have reprinted here what I believe to be the most salient points with regards to design. And I’ve italicized the really juicy bits, because even mightily abridged, it’s a touch long. And for those with a very short attention span, you’ll be content to know that Hargreaves included this telling statement: “It is impossible to avoid the conclusion that there is something deeply and persistently amiss in the way that policy towards IP issues in the UK is determined and/or administered.”

The entire report is available online (click link) if you’d like to read it in full.

But fast-forwarding quickly, what’s next? Announcing the government’s response to the review, Business Secretary Vince Cable said, “We are accepting the recommendations and will now set about reforming the UK’s intellectual property systems. Opening up intellectual property laws can deliver real value to the UK economy as well as the creators and consumers.”

And, a new intellectual property crime strategy and international strategy have also since been published. But, for design, a lot depends on the mooted next stage, an open consultation in May of this year [2012]. Lord knows, governments have passed over many a smart policy before. Let’s wait, hope and pray they deliver this time. Meanwhile, keep entreating your friends, colleagues and even complete strangers to sign our e-petition… 100,000 signatures means they have to debate it. So every signature counts. Make a difference. Sign right now, it’ll take you less than 60 seconds.

 

Digital Opportunity: A Review of Intellectual Property and Growth

Chapter 7 Designs

7.1         Unlike patents and copyright, design was not explicitly mentioned in the Review’s Terms of Reference. This is surprising, given the economic importance of UK design and the strength with which a number of issues relating to this area of IP protection have been raised in evidence to the Review.

7.2         Design is a wide-ranging concept covering a range of industries from fashion design (apparel) to industrial design. According to new estimates by Imperial College, design constitutes the largest contribution to overall intangible investment in the UK economy. In 2008 investment in design alone amounted to 1.6 per cent of Gross Domestic Product (GDP).

7.6         Design evidence submitted to the Review was predominantly concerned with protection and enforcement issues. The discrepancy in levels of protection between design right (protecting technical design) and copyright (protecting artistic designs such as illustrations) was highlighted. This applied both in terms of duration and availability of rights and their enforcement. ACID in particular was concerned that SME designers’ products were routinely copied by major High Street retailers. Unlike copyright, which is supported by criminal sanctions and is therefore of interest to police and trading standards officers, design rights only offer civil sanctions.

7.7         A point made by several designers was the problem of having to tender for contracts with designs, which they had little chance of being able to protect, frequently finding their best ideas simply taken without compensation. The designers concerned had invested time and money in developing these designs but either could not afford to take enforcement action or found the law inadequate to do so. This reflected a broader concern over the costs of litigation, and scepticism that design rights could be effectively enforced that has been corroborated in research being conducted for the IPO. This work suggests opinion is divided as to whether registering designs will help protect them from infringement. The development of the Digital Copyright Exchange, set out in Chapter 4 of this review, may well be relevant to the design sector and every effort should be made to include design interests in the creation of this Exchange.

7.8         In general, research is limited on design rights, and the issue is complicated by the wide range of industries involved. Different industries have different levels and types of needs from the IP framework, and they are not yet fully understood. For example, the fashion industry lives with a high rate of appropriation of their designs. They do, however, frequently pursue infringement of their trademarks (i.e. counterfeiting). Controversially, some argue that copying in the fashion industry may actually promote innovation in that once a design is copied this spurs the fashion houses that created the original to move on and design something new.

Chapter 7 Conclusions

7.9         Design has an important contribution to make to growth, and it is unsatisfactory that we start from such a low base of understanding in considering how best to optimise the IP framework to support this growth. The Review has received a good deal of evidence about the difficulties designers encounter in enforcing their rights. Knowledge of the relationship between design rights, and innovation and growth, is inadequate to draw wider conclusions about the implications of these difficulties for growth or for improvements in design rights and enforcement.

7.10 We conclude with an example, which highlights the risks associated with the current thinly evidenced and reactive approach to policy. Digital technology is altering the nature of design. It has radically altered the way in which many designs are produced, and the development of fabrication through “3D printing” can be expected to have a substantial impact. This development alone may be sufficient to require reconsideration of the interactions in law between copyright and design. In Chapter 10 we discuss the reactive character of the IP policy machinery. We hope that 3D reproduction does not become a case study in the shortcomings of this approach. The copyright issues associated with 3D reproduction need to be addressed before it becomes a widely used technology if IP law is to enable rather than inhibit the technology’s potential to contribute to growth.

Chapter 7 Recommendation: 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.

Chapter 8 Enforcement and Disputes

8.52 Counterfeiting may adversely affect growth since trademarks are associated with growth. Research has suggested that investment in brands constituted approximately six per cent of total tangible and intangible investment in the UK economy in 2006, and that firms which trade mark have significantly higher value added than non-trade mark companies. The association of brands and business growth is particularly clear in the branded fast moving consumer goods sector.

8.53 There is also a consumer protection aspect to tackling counterfeiting, in situations where consumers are being misled. This is not always the case, however, depending on the nature of the product: for example, few people believe they are buying a genuine Gucci handbag when they pay a few pounds in a street market.

8.54         Some of those who provided submissions drew attention to the losses to the exchequer, links to organised crime, health and safety consequences and other adverse effects of counterfeits. In an IP context these are very much secondary arguments, though there can certainly be value in ensuring that criminal enforcement agencies are suitably “joined up.” There are, however, good stand-alone IP arguments for the enforcement of IP law, and care needs to be taken not to confuse either the objectives or the means of tackling problems in very different areas, such as safety and counter-terrorism.

Chapter 8 Recommendation: 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 rights holders in enforcing their rights the Government should introduce a small claims track for low monetary value IP claims in the Patents County Court.

Chapter 9 SMEs and the IP Framework

Costs of IP Management

9.11        The Review has heard on many occasions and from a wide range of sources that the costs of IP management to SMEs are felt by many to be prohibitively high – both in terms of registering and maintaining IPR, but also in conducting (or entertaining the risk of being involved in) disputes.

9.12         The Review therefore asked firms to estimate their true costs of obtaining registered IPRs. The average cost to an SME of applying for, maintaining and protecting a patent, was reported to be £20,700; the equivalent figure for a trademark or design is £4,800. The mean fee paid for external advice on applying for, maintaining and protecting a patent was estimated to be £13,800; the comparable figure for a trademark or design was £6,300.

Chapter 10: An adaptive IP Framework

10.7         It is impossible to avoid the conclusion that there is something deeply and persistently amiss in the way that policy towards IP issues in the UK is determined and/or administered. The fact that problems are most striking in the area of copyright law needs to be taken into account: that may, in part, reflect the origins of the Intellectual Property Office, so named in 2007 following Gowers, having been the Patent Office since 1852. No one can be surprised that in the face of significant structural flaws, a decision to graft on to the IPO an independent committee with a research budget failed to resolve the difficulties.

10.12        A prominent and persistent example of the lobbying problem concerns the duration of copyright protection, which has been periodically extended in recent decades. In spite of clear evidence that this cannot be justified in terms of the core IP argument that copyright exists to provide economic incentives to creators to produce new works. As has been noted by a number of commentators, no one has yet discovered a mechanism for incentivising the deceased.

10.13        The most recent example of such extensions involved a UK decision to support a still incomplete EU process to extend the rights of owners of sound recordings from 50 years to 70 years. Such an extension was opposed by the Gowers Review and by published studies commissioned by the European Commission. A decision in favour of the change was, nonetheless, announced by the Secretary of State for Culture, Andy Burnham, in December 2008. The Government’s own economic impact assessment subsequently estimated that extension would cost the UK economy up to £100m over the extended term. One justification for extension might be that Ministers wished to afford extended copyright as a mark of respect and gratitude to artists and their families – a perfectly legitimate argument, though one that ignores the fact that very often artists’ rights are owned by corporations. Independent research commissioned for the Gowers Review suggested that the benefits to individual artists would be highly skewed to a relatively small number of performers.

Chapter 11 Impact

Recommendations

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 rights 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.

Some additional thoughts from others: http://blogs.computerworlduk.com/open-enterprise/2011/06/harping-on-hargreaves/index.htm

http://www.guardian.co.uk/law/2011/may/18/hargreaves-report-recommends-overhaul-of-copyright-laws

And the government response, August 2011… http://www.ipo.gov.uk/ipresponse.htm

Categories: Copyright, Design

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