By Nigel Miller

Last month David Cameron launched his vision of a tech city in East London — a hub that will stretch from Shoreditch and Old Street in London E1 to the Olympic Park.

The objectives are laudable. The Government are seeking to back the big businesses of tomorrow. “We are firmly on the side of the high-growth, highly innovative companies of the future” said David Cameron.

At the same time, a raft of other measures was announced to improve the climate for technology and entrepreneurship in the UK. Among these was a review of intellectual property laws “to make them fit for the internet age”. As Cameron said: “I want to encourage the sort of creative innovation that exists in America.”

Mr Cameron said the founders of Google had told the Government that they could not have started their company in Britain. “The service they provide depends on taking a snapshot of all the content on the internet at any one time and they feel our copyright system is not as friendly to this sort of innovation as it is in the United States.

Over there, they have what are called 'fair-use' provisions, which some people believe gives companies more breathing space to create new products and services.”
The idea of reviewing the “fair use” exceptions under UK copyright laws is not new; it was floated in the 2006 Gowers Review into intellectual property laws but was placed on the backburner by the then Government.

The latest review comes hard on the heels of the Digital Economy Act, born out of the Gowers Review, and which was one of the final twitches of the dying Labour Government. This was a wide-ranging piece of legislation, covering such diverse areas as the future of Teletext to the age-classification of video games. By far the most controversial aspect of the Act was the measures relating to the online infringement of copyright. These measures were designed primarily to deal with online piracy and the illegal downloading of music, films and video games and impose new obligations on Internet Service Providers to co-operate with copyright owners in enforcing their rights.
If the new Government is looking at how companies such as Google can make use of third party copyright material, is the gamekeeper turning its attention to poaching?
Google can be much admired for innovations which have aggressively probed the boundaries of intellectual property laws. The Google Books project is one such example. Google Books is a service launched by Google in 2004 that searches books that Google has scanned. It is estimated that Google has scanned over 10 million titles (both in and out-of-copyright). For books in the public domain, where the copyright has expired, there is no issue. For books in respect of which Google has the publisher’s agreement, there is no issue. The problem arises in relation to books which Google wants to scan but which are still protected by copyright and where Google does not have the agreement of the copyright owner.

Google’s position was that scanning the books and giving access to short snippets on its website is legal and is covered by the US copyright doctrine of “fair use” because it promotes learning, is not substitutable for a purchase and does not undermine the prime economic interests of the rights holders. What is and what is not “fair use” is open to interpretation. Google was sued for copyright infringement in 2005 by the Authors’ Guild and the Association of American Publishers for scanning books which were still in copyright. The dispute was settled out-of-court in 2008 enabling Google to continue to digitise and give access to the books in the US subject to a compensation arrangement for rights owners.

While the US may have the concept of “fair use”, in the UK a third party copyright work can be used if that use is considered to be “fair dealing”. It is for example within the scope of “fair dealing” to copy short extracts of a copyright work for non-commercial research or private study, for criticism or review, or reporting current events. It can be hard to interpret when the use of a copyright work is “fair dealing”, described by the court in one case as "an elusive concept". It is often analysed by looking at the economic impact on the copyright owner of the use. Where the economic impact is not material, the use may count as fair dealing.

Clearly, what is to one person a creative and entrepreneurial innovation may be to another an infringement of their rights, stifling creativity. Finding the right balance is extremely complex. While, therefore, there is certainly a need for intellectual property laws to develop in the light of technological developments, it does not necessarily follow that the law should develop in a way which inherently favours rights users as against rights holders.

The assumption underlying the latest review is open to question. What evidence is there that the current state of intellectual property laws in the UK is acting as a brake on innovation and deterring technology companies from establishing in the UK? The UK already has a thriving creative industry — leading the world for example in computer games. Would-be entrepreneurs tend to be more focused on matters such as the availability of tax breaks and grants, access to skilled and reasonably priced labour and the availability of finance. Perhaps it would be more fruitful to review these issues than the more arcane aspects of our copyright laws.

Nigel Miller is a partner in the technology and ebusiness team at Fox Williams LLP and can be contacted for more information on this feature at nmiller@foxwilliams.

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