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Monday, 30 May 2011

Hargreaves: some further thoughts and comments

The sad fate of British reviews of intellectual property
The dust has not yet settled on Digital Opportunity: a review of intellectual property and growth (the main recommendations of which are noted here), the fabled Hargreaves Review of how to make money from your own intellectual property and other people's, so it's high time for a brief round-up of responses to it (an earlier review of very swift responses to Hargreaves was posted on the 1709 Blog here).

Duncan Calow (partner and digital media specialist, DLA Piper) expressed relief the fact that there wasn't anything hugely radical in it:
“Suggestions that Professor Hargreaves would propose sweeping new changes in copyright law have proved to be nonsense. Instead he has chosen to revisit some of the more sensible proposals from previous work. As a journalist and academic, Professor Hargreaves knows that in a digital world of clouds, networks and user-generated content we are all both users and owners of digital rights [This Kat, who has had some experience of both academe and journalism, wonders whether -- though there be exceptions -- both groups benefit more from free and easy access to others' works than from the protection of their own]. So despite the talk of copyright wars, fair and effective rules require thoughtful and proportionate change, not hyperbole".
His partner Simon Levine however added a word of caution, based on the fact that the internet is global, copyright is fraught with international obligations, but anything the UK even thinks of doing is going to be somewhat parochial unless everyone else does it too:
“...  if businesses are ever going to be able to fully exploit the opportunities that the internet offers as a global channel to market, it is essential that we focus on how international IP laws can be harmonised accordingly. This is acknowledged in the report ... The Hargreaves report contains some very sensible and well-considered proposals. However, it remains to be seen how these will be translated at an international level – and it is this that will dictate its true impact” [It's not just a question of international law, says the Kat, it's a question of diplomacy: for as long as it's profitable for rogue states to remain rogue states, the problems will be shifted around but not eliminated].
More caution comes from the Federation Against Software Theft (FAST), which was not slow to express concern over the uncertainty of what exactly will be taken forward and how quickly.
"Key findings of the Report include the suggestion of a ‘Digital Copyright Exchange’, where the intention is to promote growth by having an efficient, open and effective digital market where rights can be can be speedily licensed and effectively protected. The intention is noble. However, it is yet to be seen how this could work in practice or whether it is intended or even desirable for the software industry to participate [The software industry in Europe has a modified statutory version of the digital copyright exchange, says Merpel -- it's called the interoperability and reverse engineering provisions of the Software Directive. The software industry wasn't given much of a choice as to whether to participate, but doesn't seem to have died from it]. : 
A more telling cautionary note from FAST comes from its contrasting the recommendations of Hargreaves with those of its predecessor, the Gowers Review:
“In 2006, Gowers recommended that the enforcement regime should be ‘effective and dissuasive’ and arguably it is not when simply a licence fee can be paid if an infringer is caught on the hop; the Gowers sentiment should not be forgotten. [It hasn't been forgotten, says Merpel. It has been ignored]
The metaphor of "destinations without routes" is that chosen by Andrew Sharples (partner and head of EIP Life) to epitomise Hargreaves in his review here. The Review acknowledges that it is “focused upon the main issues, at the risk of ignoring important points of detail” -- but the main issues have to be seen as targets that can somehow be achieved: the detail helps us understand how to get there as well as letting us know which recommendations are too ambitious to be achieved at all. He too focuses on the Digital Copyright Exchange (DCE), which would be
" ... a common, standardised platform for licensing works. ... However, the Review also acknowledges that to encourage uptake there will need to be disadvantages to not being part of the exchange; suggestions include greater damages for infringement of works included in the exchange; applying sanctions under the Digital Economy Act only in relation to works included in the exchange; giving creators the right to withdraw from publishing agreements where the publishers do not place works on the exchange; and perhaps most controversially, treating works not placed on the exchange as “orphan works” ... [Expect an avalanche of holiday snaps and wedding photos if this idea ever gets accepted, warns Merpel] The Review does not advocate that the government creates the DCE (so as to avoid “a nightmare of IT procurement followed by the birth of a white elephant”) but instead brings together interested parties to find ways of overcoming divergent interests. How these divergent interests are to be overcome is not clear though, and almost as soon as the Review was published criticisms were made of the viability of this proposal. Certainly the goal of establishing the DCE by the end of 2012 seems optimistic".
Orphan works also come in for his attention. Can the UK do its own thing regarding such works, given that works 'freed up' for use under emancipating legislation may still be regarded as infringing copyright everywhere else in the world:
"The problem of orphan works, i.e. works for which the rights holder cannot be identified, is addressed, the suggestion being that after a diligent search to locate the owner, orphan works should be deemed to be licensable for a nominal fee. This would free up the use of large bodies of works in the national archives. However, it is suggested that a diligent search would simply require checking if a right is contained in the DCE, and, if not, treating it as an orphan work. This could effectively introduce a requirement for copyright registration, and it is questionable whether this would be consistent with the UK’s obligations under the Berne Convention to provide copyright without a registration requirement [Article 5(2) of the Berne Convention states that "The enjoyment and the exercise of these rights shall not be subject to any formality". Merpel says, I'm no lawyer and I'm pretty informal -- but this looks like a formality to me ...]".
A more encouraging view of the DCE comes from Maxine Horn (CEO of Creative Barcode -- a company that neither creates new designs nor uses other people's, but provides digital watermarking by which use of designs can be monitored and licensing thus rendered more effective). After analysing the proposal she concludes:
"A Digital Copyright Exchange implemented in a robust whilst non-complex manner would serve the creative industries and innovation focused businesses very well. Those who feel that an open-source or ‘freeconomy’ based on free access to use, replicate, re-mix or build on others knowledge and work is the only route to innovation growth are perhaps not considering the rights of the creative industries to earn a living from their original works. IP, particularly pre-commercialised, does not need to be restrictive to be effective [This is the problem, says the Kat: we all know what 'restrictive' means, but 'effective' carries no single shared meaning -- and we're talking about the conflicting interests here]. A fair model that recognises respects and remunerates the professional idea generators, creators and solution-led creative consultancies should surely open up innovation not restrict it".
Creative Barcode gets a nod in the Forbes Blog's comment on Hargreaves, "Copyright and Related Laws Hold Back Innovation and Growth, Say British", which views the UK from a distant US perspective and says:
"This is not exactly a call for a new type of creative commons, though CC licensing has clearly aided the growth of services like Flickr and platforms like WordPress. What the British want to see is a Digital Copyright Exchange, a market where digital rights can be processed rapidly and cheaply [Says Merpel, processing digital rights sounds a bit like an exercise in commodifying IP. Have humans and their feelings been eliminated somewhere along the line?]".
The IPKat remains committed to keeping an eye on Hargreaves. If anything exciting comes of it, he will do his best to let you know.


laurie said...

Dear IPKats
I thought you might like to read my post on my blog today on Hargreaves and the Digital Copyright Exchange. Sounds like a much more fun place than the Stock Exchange. By post is at

Stay cool
Laurie Kaye

Graham Arthur said...

Re the harmless sounding format shift/private copy exception, there may be trouble ahead. That trouble is private copy levies.

There is now a formal UK Government policy paper regarding implementation of (inter alia) EU Directives, and one of the objectives of the policy is that "EU directives will normally be directly copied into UK law (‘copy-out’), except where it would adversely affect UK interests".

This will affect Government policy as far as implementing a format shift/private copying exception pursuant to the Copyright Directive. Article 5(2)(b) of the Directive says that an exception may be introduced "in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subject-matter concerned".

It will be hard to avoid some provision for fair compensation. Although Recital 35 allows an exception to be implemented in a manner that assumes that no need for fair compensation arises, this will be difficult given that similar exceptions implemented across the EU make (in flamboyant fashion) the exact opposite assumption. This is not an enviable position for the UK Government to find itself in.

The best solution may well be to adopt the solution fastened on post-Gowers – that is, do nothing.

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