Hargreaves review: the results

The Hargreaves Review of Intellectual Property and Growth was commissioned by David Cameron, the Prime Minister of the new conservative government in the UK.

The report’s remit was to review the operation of intellectual property laws in the UK and to ascertain how the intellectual property framework may be used to foster entrepreneurialism, economic growth and commercial innovation.

One of the focuses of the report was to identify barriers imposed by the intellectual property regime in the UK and how those barriers may be overcome. The review followed hard on the heels of the Gowers Review, another report on IP in the UK, which was delivered in 2006.

The report’s findings recognised that IP rights are fundamental to economic growth and innovation, and that a radical overhaul of the IP system was not required to make it fit for purpose in the 21st century. Adopting an ‘evidence-based’ approach, the report culminated in 10 recommendations to advance innovation and improve economic growth.

Representatives of the creative industry supported the report’s refusal to liberalise fair-use laws and commended the report for acknowledging that creative industries require a robust IP system to maintain licensing models. Businesses with activities that are dependent on creative industries welcomed the recommendations for the relaxation of barriers to licensing and increased transparency.

The recommendations fall into three broad categories: increase the ease with which copyright works may be licensed; remove entry barriers caused by the patent system by reducing the time required to process applications, diminishing the prevalence of low-value patents that stand in the way of innovation, in addition to taking steps towards a single European patent and a European patent court; and monitor aspects of the current IP system in the future with a view to facilitating economic enforcement of intellectual property rights and improvements to protection in the design industry.

"Emphasis in future policymaking was placed on evidence-based reviews of market conditions rather than policy-making in reaction to lobbying and vested interests."

One of the main aims of the report was to suggest improvements to the UK system that would facilitate the exploitation of intellectual property owned by small and medium-sized enterprises (SMEs). The current system is said to impede the growth and economic activity of SMEs due to uncertainty in the application of copyright, design and patent law. The lack of knowledge in industry means that these areas of law act as obstacles in respect to economic activity.

In a disturbing finding, research obtained by the review highlighted that many new products, services and processes are brought to market by maintaining the secrecy of inventions with a view to establishing a lead in the market over competitors, rather than reliance on formal intellectual property rights. This was said to be due in part to a lack of clarity in the law.

Moving forward, the report advocates a more integrated role for the UK Intellectual Property Office in future reform, by clarifying the law in respect to copyright by the production of opinions and annual reviews in respect to the effectiveness of the IP system.

Importantly, emphasis in future policymaking was placed on evidence-based reviews of market conditions rather than policy-making in reaction to lobbying and vested interests, in order to avoid distortions and complexities in the IP system that law-making based on these factors creates.

Extensions to the length of copyright protection and speedy passage of the Digital Economy Act 2010 (subsequently challenged in the High Court) were cited as examples of developments in IP law that have become skewed from what is in the best interests of incentivising growth, economic opportunities and predictability in the IP system.

The authors of the review are confident that adoption of the recommendations will result in a stronger IP system in the UK and this will foster innovation and economic growth. Time will tell, as 25 of the 54 recommendations made by the Gowers Review have been implemented in whole or in part.

Recommendations include

1.Reform of the IP system in the UK should be led by objective evidence of market conditions. A mandate should be granted to the UK Intellectual Property Office to allow it to play a more active role in assessing the impact of IP rights on markets and reform, particularly in respect to adverse competitive impacts in markets.

2.Formation of a ‘digital copyright exchange’ to operate as a one-stop clearing house designed to facilitate clearances for use of copyright works. Exchanges are to be administered by copyright holders. They will reduce time and expense to benefit consumers, business and copyright owners alike, and will permit use of material where the copyright owner is unknown. This would be supported by a statutory clearance procedure that would provide that use would be permitted where the work in question could not be located in the digital copyright exchange.

3.Facilitation of format shifting right of electronic media, by the creation of a limited private copying exception to infringement to legalise transfers of electronic copyright material (music and books, for example) to electronic devices.

4.Support to establish a framework for cross-border licensing, to enable bulk licensing of large digital collections. This would be supported by a code of practice for collecting societies, presumably to reduce perceived market abuses.

5.Extension to the fair-use defence under existing UK law, rather than its wholesale replacement by US-style fair-use of copyright material.