6 December 2006

Gowers sets out intellectual property system fit for the digital age

Andrew Gowers today published the Gowers Review of Intellectual Property. The Review was presented to the Chancellor of the Exchequer, and the Secretaries of State for Trade and Industry and Culture, Media and Sport.

The Report argues that in the modern world, the UK's economic competitiveness is increasingly driven by knowledge-based industries, innovation and creativity. Intellectual Property (IP) - protecting and promoting innovation - has never been more important.

Whilst the Review concludes that the UK has a fundamentally strong IP system, it sets out important targeted reforms. The reforms aim to:

strengthen enforcement of IP rights to protect the UK's creative industries from piracy and counterfeiting;
provide additional support for British businesses using IP in the UK and abroad; and
strike the right balance to encourage firms and individuals to innovate and invest in new ideas while ensuring that markets remain competitive and that future innovation is not impeded.

Andrew Gowers said:

"In today's global economy, knowledge capital, more than physical capital, will drive the success of the UK economy. Against this backdrop, IP rights, which protect the value of creative ideas, are more vital than ever.

"The ideal IP system creates incentives for innovation, without unduly limiting access for consumers and follow-on innovators. It must strike the right balance in a rapidly changing world so that innovators can see further by standing on the shoulders of giants. And it must take tough action against those who infringe IP rights at a cost to the UK's most creative industries.

"The Review provides sound recommendations on how the IP regime should respond to the challenges that it faces. Getting the balance right is vital to driving innovation, securing investment and stimulating competition."

The Review identified a number of areas where reform is necessary to improve the system for all its users.

With the music industry losing as much as 20 per cent of annual turnover to piracy and counterfeiting, the Review recommends strengthening enforcement of IP rights through:

new powers and duties for Trading Standards to take action against infringement of copyright law;
IP crime recognised as an area for police action in the National Community Safety Plan;
tougher penalties for online copyright infringement - with a maximum 10 years imprisonment;
lowering the costs of litigation - by using mediation and consulting on the fast-track limit. The Review acknowledges that prohibitive legal costs affect the ability of many to defend and challenge IP; and
consulting on the use of civil damages and ensuring an effective and dissuasive system of damages exists for civil IP infringement.

To provide support for businesses using the IP system the review recommends that:

UK Patent Office be restructured as the UK Intellectual Property Office, with recommendations for it to provide greater support and advice for businesses using IP domestically;
Business representatives sit on a new independent Strategic Advisory Board on IP Policy, advising the Government; and
Government improve support and advice internationally - including in India and China - to enable UK businesses to protect their investment around the world.

To ensure the correct balance in IP rights the review recommends:

ensuring the IP system only proscribes genuinely illegitimate activity. The Review recommends introducing a strictly limited 'private copying' exception to enable consumers to format-shift content they purchase for personal use. For example to legally transfer music from CD to their MP3 player;
enabling access to content for libraries and education establishments - to ensure that the UK's cultural heritage can be adequately stored for preservation and accessed for learning. The Review recommends clarifying exceptions to copyright to make them fit for the digital age; and
recommending that the European Commission does not change the status quo and retains the 50 year term of copyright protection for sound recordings and related performers' rights.

Notes for editors

1. In the Pre-Budget Report 2005, the Chancellor asked Andrew Gowers to conduct a review on the UK's Intellectual Property framework in response to the global changes affecting the IP system.

2. The Review looked at both the instruments (patents, copyright, trademarks, designs, etc.) that are provided by government to protect creative endeavour, and also at the operations: how IP is awarded, how it is licensed in the market, and how it is enforced. The Review examined whether improvements could be made and, as appropriate, made targeted and practical policy recommendations based on evidence.

3. The Review commissioned two reports; one to examine the economic impact of changes to the length of copyright term on sound recordings, and one to examine the problem of 'orphan works' i.e. works protected by copyright for which the rights holder can not be found and therefore permission can not be sought for re-use. Both of these reports are available at www.hm-treasury.gov.uk/gowers

4. The Review consulted widely with a range of stakeholders in industry, academia and the public sector. A formal Call for Evidence was held between March and April 2006.

5. Further information, including the final report, the commissioned research and responses to the Call for Evidence are available at www.hm-treasury.gov.uk/gowers

6. Media bids for Andrew Gowers should be addressed to Suzy Kantor on 020 7270 5062.