Wednesday, May 18, 2011

Hargreaves IP Review : first impressions

The Hargreaves review, or as we should call it, Digital Opportunity: A Review of Intellectual Property and Growth, is finally out, and the blogosphere is awash with comment. Like many people, Pangloss has only had a chance to glance at it and note that the key recommendations are described thus [my italics added]:

  • an efficient digital copyright licensing system, where nothing is unusable because the rightsowner cannot be found;
  • an approach to exceptions in copyright which encourages successful new digital technology businesses both within and beyond the creative industries;
  • a patent system capable of preventing heavy demand for patents causing serious barriers to market entry in critical technologies;
  • reliable and affordable advice for smaller companies, to enable them to thrive in the IP intensive parts of the UK economy;
  • refreshed institutional governance of the UK’s IP system which enables it to adapt organically to change in technology and markets.
Most of this seems at first sight to be very good news. The emphasis throughout on an empirical evidence base for IP policy is quite staggeringly refreshing in a field which is known to be the most lobbied by partisan stakeholders of any economic policy area. Much of this, one hopes, comes from the fact that serious academic economists , not paid by any industry or rightsholder sector, have contributed in depth to the Report. There is a formidable list of supporting evidence and documents which will be a great resource for those working in the field. In particular the restraint in paragraphs like this is to be treasured:

"No one doubts that a great deal of copyright piracy is taking place, but reliable data about scale and trends is surprisingly scarce. Estimates of the scale of illegal digital downloads in the UK ranges between 13 per cent and 65 per cent in two studies published last year. A detailed survey of UK and international data finds that very little of it is supported by transparent research criteria. Meanwhile sales and profitability levels in most creative business sectors appear to be holding up reasonably well. We conclude that many creative businesses are experiencing turbulence from digital copyright infringement, but that at the level of the whole economy, measurable impacts are not as stark as is sometimes suggested."

Rightsholders have claimed it as a victory that no US style general exception for "fair use" (or even "transformative use" as Gowers put it) has been proposed: this is rubbish, as all sides know that would require rewriting the EU Infosoc Directive, which would take countless and possibly fruitless years of negotiation. Instead the report suggests the UK uses to the full the exceptions that are available within the EU framework, including parody, archiving, data mining and format shifting exceptions, which would finally allow the long suffering public to legally rip their own CDs to their own iPods. This is all good stuff, as the British Library have already said - but it has to be remembered the Gowers report recommended almost exactly the same things several years back, and precisely nothing happened. Let's hope Hargreaves won't go the same way.

The most unexpected outcome was probably the attention paid to the way that "patent thickets" increasingly commonly stifle innovation and hinder new intrants with new technological ideas. My colleague Technollama, a long time open source and open science advocate has written approvingly of the plans announced , which is good enough for me.

My own interest is most piqued by the recommendation that the Government bring together rights holders and other business interests to create the world’s first Digital Copyright Exchange. The idea behind this proposal is that it will make it easier for users to obtain licences of rights holders' works for digital exploitation, in the hope that this will help drive digital innovation - for example, perhaps finally allowing ISPs like Virgin to offer legal P2P for a flat fee, something which major music rightsholders have stymied for several years by refusing to issue blanket licenses for unlimited sharing. The history of Spotify is also instructive here - though they have had huge success in parts of Europe, their launch in the US has been endessly delayed by the music rightsholders refusing to play ball. Every new online service suffers from barriers to offering comprehensive current and back catalogue. It is extremely heartening to see a UK government review say upfront that the future for the content industries lies not with ever more draconian IP enforcement strategies, but with creating a market where attractive licensed content is available in ways that rival and compete with the illegal market; and where the main aim is not to alienate the potential consumer but to offer him/her a great product.

Not coincidentally , Pangloss has just come to exactly the same conclusion in her own report for WIPO on the Role and Responsibilities of Online Intermediaries in Copyright which will be launched very shortly in Geneva. Some parts of the EU policymaking machine also believes better cross licensing and collecting society arrangements are the longterm answer, not anti consumer measures like restricting services in some markets, and promoting graduated response. Hopefully the UK will now make these points during the upcoming renegotiations of the IPRED Directive.

To quote again:
"Such research as exists indicates that we should be wary of expecting tougher enforcement alone to solve the problem of copyright infringement. Instead, Government should respond in four ways: by modernising copyright law; through education; through enforcement and by doing all it can to encourage open and competitive markets in licensed digital content, which will result in more legitimate digital content at prices which appeal to consumers."

However, as one blogger has already noted ,the proposal is likely to be resisted to the teeth by some large creative industry rightsholders . Taylor Wessing note:

"Issues that arise include:

  • Who will police whether rights are being accurately recorded within the Exchange? The opportunity for abuse is immediately apparent, with many disputes over ownership being flushed out at the outset of the Exchange.
  • How will limitations on licences (e.g. territorial restrictions or particular restricted uses) be recorded? Some licences will have a string of limitations attached to them, making the Exchange quite complicated to navigate for a lay person.
  • Who will fund it? It is unlikely to be the Government given these times of austerity. Therefore, funding is likely to come from within the creative industries. Is this a cost that the industry can stomach or will this be seen as yet another cost to the creative industries, along with those of tackling digital piracy?
Finally as expected the report makes no new recommendations concerning the Digital Economy Act: it was known this would be off limits given the uncertainty around the judicial review. Given that there is still a very interesting Chapter 8 on enforcement (covering counterfeit goods and a possible small patent court claim for patent owners, as well as copyright), which concludes by recommending that
"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."
Interesting times. In the meantime Hargreaves and his team are to be given every support in the hope these difficulties can be overcome - and that these proposals will not fester like Gowers.

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