Copyright

COPYRIGHT PROTECTION
The current position
At this time, no information has been released as to whether the
proposals and timelines outlined in the second consultation will be
adopted. A recent request for updated information addressed to the
IPO received the following response:
“The Government’s consultation on the transitional arrangements
for the repeal of Section 52 of the Copyright Designs and Patents Act
1988 closed on 23 December 2015. We had hoped to publish the
Government’s respond by the end of the month. However, we received
roughly three times more than for the last consultation – all of which
had to be thoroughly considered.
We know that you are keen to see the final version of the
transitional arrangements, and regret that the number of responses,
combined with the length and complexity of some has resulted in a
delay to publication. We now hope to publish next month.”
Whilst far from ideal, the best advice that can be offered to those
businesses that find themselves in limbo pending a final announcement
is to keep checking the gov.uk website for further updates.
The impact of repeal
Designers and rights holders of 3D artistic works will be the primary
beneficiaries from the change in law. Once the repeal comes into
effect, rights holders will be in a position to prevent manufacturing,
importation and sale of unauthorised replica goods and/or able to
generate additional revenue through licensing royalties. A number
of rights holders have claimed that they will benefit from reduced
competition once unlicensed copies are removed from the market,
although the Government has treated such claims with a degree of
scepticism pointing out that there are significant differences in the
market for licensed and unlicensed copies with little potential for
consumer cross over, and limited risks of consumer confusion. In the
long term, the Government is of the view that a lack of availability of
unlicensed copies of artistic works may drive the creation of new works
and cause consumers to consider original works by lesser known
designers.
Businesses that trade in replicas (whether as manufacturers, importers
or sellers), are likely to be the hardest hit with the risks exacerbated
by a lack of certainty as to what will be considered “works of artistic
craftsmanship”. Discussion has focused on the furniture and homewares
sectors but it likely that the impact of repeal will also be felt in other
sectors such as jewellery, toys and games and merchandise. Businesses
have estimated that it will take an average of 5 years to change their
product offerings. The costs of introducing new products are estimated
at £20,000 - £40,000 per product with only a fraction of new product
lines likely to be commercially successful. Licensing may be an option
for some but this carries its own costs and uncertainties. Those selling
popular replica lines may face significant competition as a high volume
of product is placed on the market during the limited depletion
period by businesses trying to sell off their stock at reduced rates in
favour of destroying it. Many businesses will also be left trying to
extract themselves from contractual commitments with the average
costs per firm over the proposed transition/depletion period estimated
at circa £97,000. The Government has acknowledged that some small
and micro business may simply not survive the changes and that others
may need to consider redundancies or other cost cutting measures.
Creators and users of 2D images of artistic works will also find
themselves affected, as a 2D image of a protected artistic work will,
unless authorised, be deemed an infringing copy post-repeal. Image
libraries will need to undertake a massive review exercise to establish
which of their images include artistic works. Likewise, publishers and
museums will have to review images contained in current and planned
works. In some cases it may be that existing exceptions, such as incidental
inclusion, will apply. In other cases it will be necessary to obtain licenses
or simply cease use of images containing artistic works. It is estimated
that on average the repeal will increase image licensing costs by
approximately £6,000 per title. In some image-driven editions, licensing
costs may result in titles being withdrawn.
The final group to be significantly affected by the repeal is the
consumer. There may be a limited short term benefit to the consumer
as high volumes of stock are placed on the market at heavily discounted
prices during the depletion period. In the medium term it is likely
that the consumer will experience a reduction in choice and, as a
result of reduced competition in the absence of unlicensed product,
potentially an increase in prices. It will remain to be seen whether
the repeal will result in a wider choice of original works in the longer
term.
CTC Legal Media
THE COPYRIGHT LAWYER
23