IP LAW: THE GOWERS REVIEW Implementation Gives Way to Consultation

The Gowers Review of Intellectual Property, published in December 2006, made no fewer than 54 recommendations for reform of the UK’s framework for a successful IP system. If you’re thinking that these recommendations don’t impact on you and your clients, you could be wrong. The increasing importance of IP rights to the UK economy means that there are few businesses (law firms included) whose value does not depend to some degree on their ability to safeguard and exploit their IP rights and it is estimated that 70 per cent of a typical company’s value lies in its intangible assets, up from around 40 per cent in the early 1980s. So the likelihood is that at least some of the Review recommendations will affect you or your clients.

The Review envisaged a one to two year timeframe for implementation of the recommendations. As we approach the first anniversary, what progress has been made regarding implementation and what further developments can you expect before 2008?

Possibly the most visible of the measures taken so far to implement the Review has been the change of name of the Patent Office to the UK Intellectual Property Office (UK-IPO) with effect from 2 April (Recommendation 53). The Review considered that the former name did not reflect the broad range of functions undertaken in relation to all IP in the UK and created a perception that patents took priority over other forms of IP. The name UK-IPO will be an operating name until the necessary legislative changes can be made.

The Government has been somewhat slower off the starting blocks in implementing the other recommendations of the Review (with only six of the remaining 53 being completed so far).

The Review concentrated its recommendations in three key areas:

• strengthening enforcement of IP rights;

• reducing costs of registering and litigating IP rights (including better provision of IP information to UK businesses at home and abroad); and


• improving the balance and flexibility of IP rights to enable consumers to use material in ways that do not damage the interests of rights holders.

Strengthening enforcement of IP rights

With regard to enforcement of IP rights, most significant has been the bringing into force of section 107A of the Copyright, Designs and Patents Act 1988 with effect from 6 April 2007 (Recommendation 42). Formerly, Trading Standards had powers and duties to prevent the sale of trade mark protected goods but not to deal with copyright infringement, limiting its ability to deal with the counterfeiting of CDs and DVDs. Trading Standards now has responsibility for enforcement in relation to copyright infringement with the power to make test purchases, enter premises and inspect and seize goods and documents. The Government has allocated £5 million to fund enforcement of these new powers.

Other measures to implement the recommendations regarding enforcement include the recognition of IP crime as an area for police action as a component of organised crime in the updated National Community Safety Plan (Recommendation 41) and the launch in February 2007 of the UK-IPO Innovation Support Strategy including the pilot of an IP health check scheme for small businesses and new IP awareness initiatives. This implements Recommendation 35 that the former Patent Office should continue to raise public awareness of IP and the wider impact of IP crime. The Review concluded that consumer awareness of and respect for IP rights in the UK was relatively low with copying and counterfeiting being seen by many as “victimless crimes”.

Reducing IP Costs for Businesses

The launch of the UK-IPO Innovation Support Strategy also had the objective of implementing Recommendation 27 - to improve SME business support by establishing formal collaboration between the UK-IPO and Business Link and by conducting a pilot replicating the French “IP Genesis” Scheme. The latter offers a free IP audit to French SMEs who are not using the French IP system, especially the patent system.

The UK-IPO has signed an agreement with the Japan Patent Office to pilot a scheme (the Patent Prosecution Highway) that will improve the quality and efficiency of processing applications at both offices (Recommendation 19) and the European Patent Office has, based on the UK-IPO’s example, decided to pursue work sharing with the Japan Patent Office (Recommendation 18).

Improving the Balance and Flexibility of IP Rights

Recommendation 33 of the Review invited the Office of Fair Trading (OFT) to consider conducting a market survey into the UK collecting societies to ensure the needs of all stakeholders are being met.

Collecting societies license rights to use copyright protected music content to third parties on behalf of rights holders. In the UK these include Mechanical Copyright Protection Society/Performing Rights Society (MCPS/PRS) and Phonographic Performance Limited (PPL). Whilst acknowledging that collecting societies save licensees the time and cost of negotiating licences with individual rights holders the Review concluded that:

• the multiplicity of collection societies means that businesses are often required to obtain several licences to cover all the rights required e.g. anyone wishing to play music on business premises must purchase one licence from PRS for the rights in the music and lyrics and another from PPL for the rights in the sound recording. The Review felt that encouraging a cross-licensing agreement between collecting societies could benefit licensees and, if simplifying the process encouraged licensees to take up more licences, rights holders

• the exclusive licences taken by collection societies in the UK prevent members from making their work available free of charge (through the use of so-called Creative Commons licences) in contrast to the USA where, owing to antitrust regulations, collecting societies take a non-exclusive licence to their members’ works


• the absence of pan-European copyright licences require copyright licences to be negotiated for each state at increased cost.

Implementation of this recommendation has been in the letter rather than the spirit.
The UK-IPO has stated that “following a full review of the concerns put forward by Gowers, the OFT is able to report that it is provisionally of the view that such a study is not appropriate at this time.”

And implementation of the remaining 47 recommendations may well be characterised by a similar degree of caution. In early October the UK-IPO stated,

“In moving forward with the remainder of the recommendations, the Government needs to carefully consider the costs and benefits before proceeding with consultation on implementation of several of the recommendations. Therefore, in some cases, it is not going to be possible to implement recommendations within the one to two year timeframes suggested by Gowers.”

It is not altogether surprising, given the radical nature of some of the recommendations (particularly in the field of copyright law), that the UK-IPO has determined to consult with stakeholders before rushing to implementation. In early October the UK-IPO released a consultation document on fast track services for patents and trade marks. Consultations on copyright exceptions (including the recommended exception for the purposes of caricature, parody or pastiche), fees and the research exemption in the Patents Act can be expected before the end of the year. Rights holders and users alike (and those who advise them) should not lose the opportunity to respond.




This article was first published in The Law Society Gazette in November 2007 and reflects the legal position at that time.