The Gowers Review Of Intellectual Property

Originally published in Lawrence Graham's 'SmartLaw' newsletter, March 2007

© Lawrence Graham LLP

The eagerly awaited Gowers Review of Intellectual Property was published on 6 December 2006. With the potential to be the biggest shake-up of UK intellectual property law for years, the Review has been welcomed by some, but criticised by others. So what was the Review all about and what impact will it have on intellectual property owners and users?

The Chancellor of the Exchequer announced the Review in his 2005 Pre-Budget Report. It would be led by Andrew Gowers, a former editor of the Financial Times. Its remit would be to analyse and report within a year on the performance of the entire intellectual property (IP) system in the UK, and then to make recommendations for specific changes and policy improvements. A tall order by any standards.

The government wanted to know whether the UK’s IP system is "fit for purpose in an era of globalisation, digitisation and increasing economic specialisation". Broadly speaking, the answer that came back was yes … but with some room for improvement.

Overall Gowers has made 54 recommendations. Most of these focused on strengthening the enforcement of IP rights, reducing the cost of registering and litigating IP, and improving the balance and flexibility of IP rights to allow their use in a way consistent with the digital age.

The key recommendations include:

The illegal practice of format shifting – copying music from a legitimately bought CD to a legitimately bought MP3 player, for example – is now widespread. The proposed change would allow a user to copy content between media and/or technologies for personal use, but it would not extend the freedom to other kinds of copying for private use.

This proposal appears to be good news for consumers, although there is a danger that if the exception is implemented, rights owners will increase content prices to compensate for subsequent copying. Worse still, the exception would apply only to copyright works published after the new law came into effect. So it would be legal to copy new tracks onto an iPod, but still illegal to do the same to older ones. How this would work in practice is not made clear.

The focus here is on new works that rework copyright material for a new purpose or a new meaning; perhaps where a musician samples an existing track and includes it in a new song, or where old TV footage is re-used in a new programme. Currently users must clear use of the rights with their owners and this is costly and time-consuming.

At present overriding EU legislation prevents the UK from creating an exception of this kind. The Review proposes that the government should seek a change in the EU law and that in the meantime (and by 2008) it should introduce a narrower exception – one already permitted by EU law – for the purposes of caricature, parody and pastiche. Good news for advertising agencies searching for inspiration then!

Orphan works have unknown or untraceable owners. The Review recommends free use of orphan works as long as the user has carried out a reasonable search to identify the rights owner. Again, a change to overriding EU law would be required first.

The Review further recommends that the Patent Office should develop guidelines on what constitutes a "reasonable" search and that it should establish a voluntary copyright register to make the searching easier. Is this the first step towards copyright registration in the UK? And, if a ‘voluntary’ system did come about, which lawyer would confidently advise a client not to bother with registration?

The music industry, which has been lobbying intensively for an extension of protection to 95 years (in line with the US), has been up in arms over this recommendation. Nonetheless Gowers was not convinced that extending the duration of protection would benefit performers. Economic data shows that it is only a very small number of exceptional cases (such as the Beatles) who would derive much financial advantage from extended protection.

This issue is already under review by the European Commission, making it likely that the music industry will now take its campaign to Brussels.

Gowers proposes that – on payment of an additional fee – the Trade Marks Registry will examine an application quickly (that’s within 10 days). This would mean that if a UK trade mark application attracted no objections (either from the Registry or a third party) it could be registered in about four months (including the three month publication period) instead of the current six to nine months. This change would be of particular benefit to brand owners wishing to launch a new product quickly.

The idea here would be to encourage innovation by changing the current (rather opaque) exception so as to allow all researchers to examine and improve upon existing inventions without first obtaining permission from the patent owner or paying a licence fee.

The Review recommends widening current UK law to allow certain acts undertaken for non-commercial purposes as well as all scientific research concerning the object of an invention. Though this is likely to be controversial among patent owners, it might help universities and similar research institutions which do not always benefit from the current exception. It is a widely and erroneously held belief that the current exemption covers all R&D and that a patent infringement occurs only when there is an attempt to commercialise the results.

Gowers did well to understand the current law in this area. His review argues that to extend these rights would stifle, rather than promote, innovation.

The EU has debated this for many years without reaching a conclusion acceptable to all member states. However, the Review argues that a Community-wide patent should cut costs and make litigation easier.

This would then match the maximum penalty for offline copyright infringement. It would apply to infringements carried out in the course of a business or by consumers where the infringement is committed to an extent which prejudicially affects the copyright owner.

Trading Standards officers can already take action with respect to suspected counterfeit goods, but the corresponding legislation covering pirate goods has not yet been brought into force. Doing so would give Trading Standards the power to make test purchases, to enter premises, and to inspect and seize goods and documents where they suspect copyright infringement.

More generally, Gowers suggests that:

• the UK Patent Office should be renamed the UK Intellectual Property Office; and

• the Patent Office should be given responsibility for developing and distributing a selection of model business-to-business IP licences.

The ball is now back in the government’s court. The Treasury has announced an extra £5 million funding in 2007/08 for Trading Standards to support their new powers, but it is not at this stage clear which (if any) of the other Gowers recommendations will win the government’s favour.

Since implementation of many of the recommendations would require further consultation or, in some cases, changes to EU law, it is perhaps best to see the Gowers Review as the first stage of many in the process of legislative change. As to what the final impact of Gowers will be, we will just have to wait and see. Watch this space!

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