The former Financial Times editor was commissioned by Chancellor
Gordon Brown in December 2005 to undertake an independent review of
intellectual property. His 150-page report was published yesterday
and contains few surprises.
Private copying
Gowers wants to see a private copying exception written into
copyright law. That was expected and will find no opposition from
the UK music industry. Currently, copying from your own CD to your
hard drive and MP3 player is infringement, though the music
industry turns a blind eye. Gowers wants the law to reflect
reality: "private copying should enable users to copy media on to
different technologies for personal use," says the report.
What is more controversial is that Gowers sees no need
for an accompanying copyright levy. In France, Germany and
many other countries, private copying is allowed but compensated by
a tax on blank media. The Copyright Directive says member states
can choose to forbid private copying or allow it – provided there
is fair compensation for right holders. Gowers believes that
compensation can be won another way.
His report explains: "If rightholders know in advance of a sale
of a particular work that limited copying of that work can take
place, the economic cost of the right to copy can be included in
the sale price. The 'fair compensation' required by the Directive
can be included in the normal sale price."
Kim Walker, head of Intellectual Property with Pinsent Masons,
said: "He's saying the price of CDs will go up."
It may be that music purchased as a download is less frequently
burned to CD than music purchased as a CD is ripped to another
device – so the price rise may not affect iTunes. Gowers also warns
that any private right to copy "cannot be extended retrospectively
as copies of works already sold would not include this 'fair
compensation'."
Walker said: "You can rip CDs bought after the law changes –
which Gowers hopes will be by 2008. But you also need to pay to
legalise your current collection."
The report states: "collecting societies may wish to consider
making a single block licence available to allow consumers to
format shift their back catalogues legitimately."
Walker says he could be deliberately provoking the music
industry here. "Would it dare to hike the prices of CDs and blame
this new right to make private copies?," said Walker. "Would
it have the audacity to demand a lump of cash from each of us for
the right to keep playing our existing collections of ripped
music?"
AIM, a trade body for independent music labels, criticised
Gowers yesterday for his dismissal of levies. "The fact that these
levies, across the board, may be judged to be working imperfectly
and arguably may require some reform, rationalisation (possibly
even replacement by some system which fulfils the objective more
efficiently or imaginatively) does not detract from the essential
justice of their existence," it said in a statement. It fears the
change could open the floodgates to uncontrolled and unstoppable
private copying and sharing from person to person, as well as
format to format. "Once owned, however acquired, music will be
passed on freely," said AIM.
Gowers addresses peer-to-peer (P2P)
file-sharing, but sees no need for immediate
changes to the law. Some have called for a new law to make those
who facilitate P2P file-sharing liable for copyright
infringement.
In the US, concepts of contributory infringement and inducement
were used to hold Grokster liable. Australia's concept of
authorisation was used to hold Kazaa's owner liable. The UK shares
Australia's approach but the Gowers report observes:
"Notwithstanding some similarities between UK and Australian law,
the outcome of similar lawsuits in UK courts is uncertain."
Gowers favours self-regulation. The ISP Association is
encouraging ISPs and rights owners to cooperate on a Best Common
Practice document that will address P2P abuse. Gowers sees this as
a good way to change public attitudes and behaviours without court
action. Only if there is a failure to agree would Gowers advocate
new statutory controls.
Listen to the Beastie Boys, not Cliff Richard
Cliff Richard and others in the UK record industry have called
for the Commission to increase retrospectively the term of
copyright from the current 50 years to 95 years. Gowers disagreed.
But while he snubbed Sir Cliff, Gowers does have an ear for hip
hop.
The report notes that hip hop grew in the US in the late 1970s
and early 1980s because producers could exploit a 'transformative
use' exception in US copyright law. That changed in 1991: a court
ruling narrowed the exception significantly, so musicians had to
"get a licence or do not sample." So musicians today have to clear
rights with the owner of the sound recording and the publisher and
negotiate a licence fee before using a sample.
The Beastie Boys released the album Paul's Boutique two
years before that ruling. All the sampling on the album was
uncleared. The New York trio were asked about the changed regime
and their reply is quoted by Gowers: "we can't go crazy and sample
everything and anything like we did on Paul's Boutique. It's
limiting in the sense that if we're going to grab a two-bar section
of something now, we're going to have to think about how much we
really need it."
Gowers wants the EU's Copyright Directive amended to allow for
an exception for creative, transformative or derivative
works, provided this does not conflict with the normal
exploitation of the original work and does not unreasonably
prejudice the legitimate interests of the rights holder. Samplers
will argue that their work increases demand for original recordings
without prejudice.
Where permissions are required, Gowers notes the hassle of
having to obtain rights from different bodies. Those wanting to
play music at an event or in a podcast need one licence from the
PPL for the rights in the sound recording and a second from PRS for
the rights in the music and the lyrics. "Encouraging a
cross-licensing agreement between collecting societies could be
highly beneficial to users," says the report. "It could also
benefit rights holders if the simpler process encourages licensees
to take up more licences."
Other changes to UK copyright law should include a new right for
“caricature, parody or pastiche,” says Gowers.
Such a right exists in other EU member states and is accommodated
in the Copyright Directive.
In what could be a reaction to Sony-BMG's 'rootkit' debacle,
Gowers wants CDs to carry clear warning labels if
they bundle Digital Rights Management (DRM). This echoes a
recommendation to the Office of Fair Trading in the wake of the
outcry over the Sony-BMG CDs that were accused of harming computers
and invading privacy.
Trade marks
Gowers likes the UK's current system. He describes it as "well
balanced" and says trade marks are affordable. But he noted that
they can take between six and nine months to be granted. He wants a
fast-track route "for firms that require protection more quickly in
order to start building up their brand." This premium-rate
service would allow trade marks to be examined and
accepted within 10 days of the application being
filed. Once the application is accepted it can be published and
thereafter the standard three-month opposition period would
begin.
Databases
At a time when nobody is sure how much protection remains for
databases, it is surprising that there are no significant
recommendations – just a brief acknowledgement of the confusion,
the result of European rulings that narrowed the so-called sui
generis right.
Patent reform
Gowers made clear that he is no fan of the US approach to
patenting business methods. He suggests tweaking our current patent
system but there is no suggestion of an overhaul. He saw no reason
to lift the current ban on patenting "computer programs as such" –
but he did not address the problem of defining this term in a
consistent way.
Gowers listened to arguments for a 'utility patent' – a monopoly
right that would be quick to obtain and last less than the standard
20 years; but he was unenthusiastic and reported a lack of evidence
to suggest that utility patents foster innovation.
Improvements that can and should be made include a
fast-track process for obtaining a patent. This
already exists, Gowers noted, but few inventors use it. His report
concludes that the system should be improved (though few details
are offered on how to do this).
Gowers also wants to see the Community Patent
system in place. This proposal was first put forward by the
European Commission in 2000. It would give inventors the option of
obtaining a single patent that would be legally valid throughout
the European Union.
The main reason it has made little progress in over six years of
debate is not opposition to the principle but a failure to agree on
the requirements for the translation of patents and on how
infringements of patents which might arise as a result of
mistranslations should be treated. Gowers offers no solutions to
these problems.
Some of the report's comments are statements of the obvious: the
'inventive step' requirement for obtaining a patent must be set "at
the correct level," says Gowers. But he offers no thoughts on
measurement or calibration.
The Patent Office is asked to make expired patents
accessible online – and it is also asked to change its
name to the UK Intellectual Property Office.
Penalties for IP wrongs
Stiffer penalties are recommended.
The maximum penalty for criminal online infringement, such as
selling unauthorised movie downloads, should be raised from two
years' imprisonment to ten, to match the maximum penalty for those
selling pirated DVDs at a market.
For civil claims, "damages should be increased to provide an
effective and proportionate deterrent to IP infringement." That
answers a call of the software industry: it can sue users of
unlicensed software but the damages it can win generally equate to
whatever the infringer should have paid in the first place. Gowers
appears to support punitive damages.
New powers should be given to Trading Standards because while it
can currently prevent the sale of trade mark-protected goods, where
the infringement relates to copyright, it has no powers to act and
cannot perform searches and seizures.
Passing off is not enough
The remedy of passing off does not go far enough to protect many
brands and designs from misappropriation, says the Gowers Review.
It says brand owners bear the costs of trying to prize copycat
brands by legal remedies or changing their own designs. Kellogg's
reportedly spent over £1 million on its advertising campaign to say
it does not make cereals for anyone else
To establish the common law remedy of passing off, a brand
holder must show that he has a reputation, that there has been a
misrepresentation, and that that misrepresentation has caused or is
likely to cause damage. This test is difficult for new entrants to
a market who want to block copycat products because they may not
have goodwill and they may struggle to show consumer confusion.
Gowers sees a possible need for a new law that tackles
anti-competitive practices. A new Directive on
Unfair Commercial Practices is being transposed into UK law that
will tackle practices having an unfair impact on consumers; but
Gowers fears that it may not provide sufficient legal sanctions for
unfair business-to-business anti-competitive practices. He stops
short of demanding such a law. The Government should monitor the
success of the Directive's implementation, he says, and if these
are ineffective, the Government should consult on changes.
Gowers also supports alternative dispute resolution
(ADR) instead of court action wherever possible.
But he acknowledges that ADR generally cannot be imposed. All he
asks is that practice directions for court procedure are altered to
give greater encouragement for parties to mediate.
Final thoughts
Kim Walker said: "Whilst the Gowers Review makes interesting
reading, it is predictable in its recommendations. The Review
was a rare opportunity to look at whether our IP laws currently
strike the right balance between fostering creativity for the
general good and giving businesses opportunities to make money, but
on the whole it only recommends tweaks to our current approach to
fill obvious gaps, facilitate enforcement and remove
inconsistencies. Although welcome, these proposals are
limited.”
