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Dr Benjamin Reid
Senior Researcher, Big Innovation Centre
T 020 7976 3552
Dr Benjamin Reid

IP freely? will the Hargreaves Review boost the UK creative industries?

Authors: Dr Benjamin Reid Dr Benjamin Reid

19 May 2011

We welcome yesterday’s (18 May) publication of Digital Opportunity: a review of intellectual property and growth, perhaps better known as the Hargreaves Review. The report takes a pragmatic, hard-nosed approach, cutting through a lot of controversy regarding ‘moral’ rights to focus on whether the current UK IPR regime is maximising innovation and economic growth. The report has a welcome international and forward-looking perspective – positioning the UK IPR regime through the likely needs of UK-based global, digital organisations of the future.

Hargreaves makes remarkably bold claims, estimating that implementing his recommendations in full would ‘add between 0.3% and 0.6% to annual UK GDP growth’ – not to be sniffed at when we’re currently struggling to achieve such a rate of growth in total. But it also maintains that it is a proposal ‘modest in ambition, and wholly achievable’. This tight-rope-walking feat – of maximum impact through minimal changes – seems a tall order, given, as the report correctly emphasises, the very central role of copyright and the IP regime to the future success of Britain’s enviable creative industries.

However, Hargreaves starts in the right place: with the evidence. He is careful to respond with appropriate caution to the piracy ‘doomsday’ predictors, but also to acknowledge the potential legal feasibility issues of importing US fair use systems ‘wholesale’. The report makes a range of recommendations but two stand out: his verdict on a ‘fair use’ doctrine for the UK and the recommendation for a central Digital Copyright Exchange.

As the Open Rights Group point out, ‘fair use’ has been unfairly caricatured as pure ‘free riding’ on content owners’ toil and sweat. The broader benefits to innovation, inter-organisational connections, and, in the long-run, to a nation’s creative industries through more creative interaction between users and producers, outweigh the investment incentives of extensive monopoly rights. Hargreaves’ proposal, which backs off aping the US ‘fair use’ system in favour of UK harmonisation with existing EU available ‘exceptions’, still offers a distinct improvement on the current system. The ‘exceptions’ approach may prove to be flexible enough to ensure users can work creatively with existing copyright works, while benefits flow to the original content owners and wider society. But even with Hargreaves, we are still in a grey area of ‘exceptions and limitations to copyright holders’ rather than clear ‘rights for users’.

The second most important point is Hargreaves’ recommendation of a central ‘one-stop-shop’ Digital Copyright Exchange for creative content. The potential size of the prize is considerable. The UK can ‘become a leader in providing the services global players use to licence their content for world content markets’. Such an Exchange could, potentially, simplify contracting across platforms, make space for the aggregating and creative use of large-scale copyright datasets in innovative ways, lower transaction costs for those seeking to acquire rights legitimately, and provide visibility to small rights owners. But the practical operation of such an Exchange presents stark challenges – not least around ownership and control. If existing major copyright holders manage the Exchange, newer entrants may feel it is run as a pure revenue generator, stifling the innovation the Exchange was designed to foster. Major digital content aggregators may hold the technology for such a complex Exchange, but are hardly innocent bystanders in the value chain either. And the government’s record on IT projects which achieve high levels of private industry buy-in isn’t exactly glowing. For Hargreaves’ Exchange concept to work it needs to be very clear whether it is a vehicle for stakeholders to exercise rights, or to simplify them.

Hargreaves’ fervent hope is that his report (the fourth on this subject in six years) avoids becoming another ministerial draught excluder ‘on the pile of IP reviews on the government’s doorstep’. Its fate depends largely on whether the Coalition’s resolve and determination matches that of Professor Hargreaves. But while the Digital Opportunity is a clear step in the right direction, it is important to acknowledge that attempts to nail down copyright regimes in ‘once-and-for-all’ legal frameworks are ill-suited to a highly dynamic global industry in which innovation and business models are still radically re-forming.