Saturday - 19 April 2014

Copyright changes risk new era of disputes

02 July 2012Written by Ivan Macquisten

Proposals to extend copyright on some designs from 25 to 70 years could set off a whole new era of legal disputes.

Business Secretary Vince Cable wants to introduce the measures as part of the Enterprise and Regulatory Reform Bill currently on its Third Reading in the House of Commons.

The desire for closer harmonisation of rights across Europe, in line with EU law, has prompted the plan to repeal section 52 of the Copyright, Designs and Patents Act 1988, which currently limits the copyright period to 25 years for artistic works that are mass produced.

However, although the proposals are aimed largely at unlicensed and illegal operations, many of them doing business out of the Far East, they have also left a number of legitimate UK manufacturing and import businesses looking at a bleak future.

The Design lobby, who say that the disparity in rights costs them hundreds of millions of pounds a year, argue that an extension of copyright to match that given to fine artists, musicians and others will allow them to invest in innovation and foster new talent. They also believe tightening the regulations will lead to improved controls on quality and standards.

On the other side of the argument, manufacturers or importers of replica objects, such as furniture, say that despite considerable investment on their part in building up businesses in a legitimate manner over a sustained period, they will soon find themselves unable to continue, with the loss of a substantial number of jobs and considerable tax revenues.

They also argue that earnings will not necessarily be diverted back into the pockets of the Design lobby because replicas tend to be more affordable to a wider number of people who would not go on to buy comparatively expensive design originals once the replica market was closed down.

It is a point acknowledged in the Impact Assessment carried out by the Intellectual property Office (IPO) just published by the Business department: "It is unlikely that in some sectors (e.g. classic design furniture), the illegal [sic] replicas are substitutes for the originals because of the large price differential."

Mr Cable addressed the House of Commons on June 11, saying: "The sale of unauthorised replicas of classic designs, such as a lamp or a piece of furniture, means that firms that depend on design can lose out, so the Bill ensures that those designs that are also artistic works and, therefore, qualify for copyright protection will be protected for 70 years from the creator's death, instead of for the current 25 years."

The change is likely to be retrospective, restoring rights to those who lost them some time ago, and it is this factor which is expected to cause the biggest headache for those currently involved in the legitimate business of manufacturing and importing replicas.

They will have to ask themselves the questions:

• Is the work under consideration one that fulfils the criteria of "artistic work", a term left undefined by the Act?

• Is the alleged replica close enough in design to be deemed a copy of the original?

Disputes that arise as a result of these points are likely to end in court where judges, rather than parliament, will have the job of defining parameters using case law.

It seems that the choices left to the importers and manufacturers will be: cease trading, negotiate a licensing deal (assuming one is available at a reasonable price), adapt what you produce so that it can't be taken as a replica or move your business to where the law does not apply. In Europe outside the UK, only Estonia and Romania operate reduced rights systems that might allow them to continue in business as they are.

One irony of the change, acknowledges the Impact Assessment, is that some works with designs over 25 years old but less than 70 could disappear altogether "because of the complexities and costs of copyright".

A considerable weakness in drawing up the Impact Assessment recommendations is that the lack of any recognised trade body for the manufacturers and importers of replicas meant that the IPO was unable to consult them at all on the likely costs and economic impact of the law change prior to publication.

"We do not have adequate data to make reasoned estimates of monetised costs" of changing the law, the Impact Assessment notes.

The industry is now making a concerted effort to get organised and has established a consortium. Meanwhile the IPO has made it clear that there will be no delay in the legislation or review of the Impact Statement to account for stakeholders who were not consulted under Government guidelines, but there may be room for manoeuvre over details of the transitional period, which have yet to be set out.

Once the new rules are passed, the period of transition will allow for stocks to be cleared, but there is no indication that firms who are faced with going out of business, or major costs as they adapt their business as a result, will receive any help or compensation.

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