Is it time for radical reform of UK IP law?

In October 2014, the UK brought into force a new package of measures to reform intellectual property (IP) law. The changes included a greater freedom for consumers to use digital media they owned, for example to copy a song from their CD to an MP3 player. Copyright got a make-over, expanding exceptions to parody and caricature. Quotations could be cited more liberally, so long as use was fair and proportionate.

According to the Minister for Intellectual Property, Baroness Neville-Rolfe: “These changes are going to bring our IP laws into the 21st century. They will mean that the UK IP regime will now be responsive to the modern business environment and more flexible for consumers.”

But was she right? Is the UK patent system fit for purpose? Since the reforms were enacted there has been a steady grumbling from entrepreneurs and lawyers. At the extreme end of spectrum lies the Pirate Party view that the basic philosophy of modern patents is flawed.

Top 10 industries applying for UK patents in 2014

Questioning the current system

Until recently the Pirate Party was dismissed as a fringe group. Lunatics. Then it started to accumulate votes in elections and last year won a seat in the European Parliament. The MEP, Julia Reda, was named rapporteur of the parliament’s review of the 2001 European Commission Copyright Directive. Her draft report advocated a reduction in protective periods, an expansion of exceptions for educational purposes and a boosting of an author’s rights when negotiating with publishers.

Even that bastion of cold reason, The Economist, is propounding wholesale review of patent theory. In August it stated: “The evidence that the current system encourages companies to invest in research in a way that leads to innovation, increased productivity and general prosperity is surprisingly weak. A growing amount of research in recent years, including a 2004 study by America’s National Academy of Sciences, suggests that, with a few exceptions such as medicines, society as a whole might even be better off with no patents than with the mess that is today’s system.”

An influential 2012 paper written for the Federal Reserve Bank of St Louis by two economists concluded: “There is no empirical evidence that they serve to increase innovation and productivity, unless the latter is identified with the number of patents awarded – which, as evidence shows, has no correlation with measured productivity.”


Suggestions for change

So where are we? The mood from entrepreneurial companies varies, of course, but it’s not hard to find radical views.

Ocado has shaken up the British grocery scene, making home deliveries of the weekly supermarket shop a reality. Paul Clarke, Ocado’s chief technology officer, believes there is ample room for a shake-up. He has two suggestions.

Applying for a patent is expensive and time consuming, which is off-putting for many young companies

“IP arising from any invention, which has been supported by government grants, must be in the public domain. This means firms are less likely to apply these funds to their ‘secret sauce’ projects,” he says.

And the second: “Instead of the current 20-year fixed-term patent, companies could be granted a patent on a sliding scale of duration – from 0 to 20 years – based on the proportion of public funding behind the invention. To avoid the need to change international patent law, companies could contractually commit for the patent to lapse after a given period.”

UK patent applications filed and granted

Restrictive policies

Bloxx is a giant in the field of e-mail security and depends on patents to keep its lead over rivals. Yet chief executive Charles Sweeney can find a variety of areas he thinks need improving.

“Applying for a patent is expensive and time consuming, which is off-putting for many young companies,” he says. One minor glitch troubles him: “You are told at the beginning of the process that, once you submit your patent application, you can only use the language included in your submission. At no stage can you introduce new words. So if you use the word rapid, you cannot refer to speed or velocity. It is actually incredibly restrictive.

“We submitted our patent application in 2006 and all these years later we’re having to use the exact same wording. It would be great if they introduced more flexibility, but I don’t see this happening any time soon.”

Lawyers may shrug and claim that laymen don’t appreciate the logic of the current system. But in truth there are many top-level partners who also believe the current system is sub-optimal.

Robert Guthrie, a partner at law firm Osborne Clarke, frowns on the October 2014 revamp. “In reality, the changes were minor tweaks to the UK’s IP laws,” he says. “Indeed, much of the IP regime in the UK is governed by European Union law, so unless there is an unexpected ‘no’ vote in the EU referendum, it is Brussels not Westminster that will have to bring our IP law into the 21st century.

“Even though the significance of the October reforms was always marginal, subsequent events have rapidly destroyed any possible claim that they represent a substantial change to the IP regime in the UK. The centrepiece of the reforms was the inclusion of a new private copying exception that would, for example, allow people to copy music from CDs on to their MP3 players without infringing copyright, even though such private copying was, of course, already commonplace. However, in July 2015 the private copying exception was quashed by the High Court following a judicial review brought by representative bodies of musicians, composers and the music industry.”

Main changes to the Intellectual Property Act

Adapting to new technologies

Lawyer Mark Owen, a trade mark and copyright partner at Taylor Wessing, says the growth of technology will mean there are always problems. “The position of copyright law is hard enough to resolve, even with the current state of technology,” he says. “Rapid developments will bring new challenges and questions, and copyright law will again find itself being blamed for being insufficiently flexible and forward-looking.”

In particular, says Mr Owen, the European Commission’s mission to create a digital single market has its work cut out. He identifies two hot spots. “First is geo-blocking and whether consumers should be able to access the same content regardless of where they are in the EU,” he says.

Businesses with deep pockets and aggressive strategies can file patent applications which, properly examined, would not be granted, but by persisting they obtain patents

“Second is whether the hosting exception, relied upon by some service providers to limit their liability for copyright content made available over their services, should be rebalanced in favour of the content owners. The European Commission is under strong pressure to make a change, but if it does so it will inevitably be accused in some quarters of stifling the growth of digital services.”

Mr Owen believes technology may resolve the geo-blocking problem before law-makers address the issue.

Sometimes, it’s simply the infrastructure which is the Achilles’ heel. Mark Pearce, head of IP at Bond Dickinson, says: “If anything, the position with regard to predatory patenting is getting worse not better.  The lack of investment in enough properly qualified examiners and the pressure on existing examiners to process applications means it is very difficult for them to examine properly all applications filed.

“Businesses with deep pockets and aggressive intellectual property strategies can file patent applications which, properly examined, would not be granted, but by persisting with these applications they obtain patents.”

Where do we stand?

So what does this add up to? A revolution? Probably not. The profession is used to hearing quibbles and is good at rebutting the most vigorous objections. For example, Kevin Cordina, partner at law firm Olswang, nails the cost issue. “The expense of registering a patent is a common complaint. James Dyson says he nearly bankrupted himself registering them. But he’s made millions from those patents. You are asking for a 20-year monopoly, the value is huge. So, of course, it’s going to be expensive.”

Even glitches get ironed out. As Mr Cordina points out, Apple lost its infamous “slide to unlock” patent in Germany recently. And the Pirate Party? “It’s easy to make popular statements, with excited promises. But I don’t think the party is taken seriously,” he says.

Is there room for improvement in the framing of patent and copyright laws? Few doubt it. Indeed work is under way on a number of fronts. But to extend those issues to a wholesale critique of the system is another thing altogether. Unless the Pirate Party starts polling some serious numbers in the European elections, we are surely free from a wholesale rethink. The conclusion that the system – flaws and all – delivers mostly what entrepreneurs and society needs, is still the majority view.