By Mark Lewis, Partner at IBB Solicitors and Caroline Bruce, Trainee Solicitor at IBB Solicitors

When David Cameron announced that he was commissioning an independent review of the UK’s intellectual property laws in November 2010, he cited encouraging the growth of businesses in Britain as one of its key objectives. He said that “the founders of Google said that they could never 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”

Following the publication of the review, which sets out several recommendations for change, the government has announced reforms to intellectual property law which are predicted to boost the economy by £7.9 billion. One of the most notable recommendations is the introduction of a digital marketplace where businesses and individuals can search for and purchase licences to use copyright material. This alone is expected to generate £2.2 billion per year by 2020.

The Digital Copyright Exchange (DCE) is intended to create a single database of IP rights that users will be able to search free of charge. The need for such a facility was made clear by findings that even the biggest organisations are struggling with the inefficiencies of copyright licensing under the current system; the BBC said that it took nearly five years to assemble the rights necessary to launch its iPlayer service.

A freely available ‘one stop shop’ for copyright licences would have clear benefits to both creators and users of copyright, including reduced transaction costs and reduced risk of infringement by providing greater clarity as to what is licensed and what is not. The DCE would also increase transparency in the marketplace as to relative price. Rights holders will be allowed to set or negotiate prices, subject to controls on unfair competition, but users are likely to benefit from more choice, better services and lower prices as a result of a more competitive market.

The DCE will be of particular benefit to SMEs, which are less equipped to cope with the cost and complexity of IP management. An accessible and transparent digital market which allows firms to write software to automate access and purchases would be an important step towards levelling the playing field. The success of the DCE will be dependent on a sufficient number of copyright holders registering their material and it is likely that incentives will be offered for them to do that. The Government has said that it will put publically owned copyright material on the DCE from day one and exert its influence on other public bodies to do likewise.

Businesses that use copyright should, however, note that the government has made it clear that there will be no excuse for failing to check the database as part of due diligence procedures; and the suggestion appears to be that those who infringe copyright in works that are on the DCE's register might have to pay more than for infringements of rights which are not.

It is intended that the DCE will be up and running by the end of 2012.

It appears from the government’s response to the review that the importance of SMEs to the UK’s economic growth has been recognised. A key focus of the reforms is the need to support SMEs, particularly in IP-using sectors. It is proposed that SMEs should be provided with access to low cost advice which combines commercial and technical insight with legal expertise to help businesses to maximise the potential of Intellectual Property.