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A Copyright strategy for socialand commercial innovation
The importance of fair use rights in supporting social and commercial innovation
Copyright law exists to encourage creativity and innovation. Copyright effectively regulates thecreation, mass production, distribution and consumption of creative content. It should thereforefoster entrepreneurism, economic growth and social and commercial innovation. Consumers have astrong interest in competitive markets and a well-functioning copyright system that encourages thecreation and distribution of creative content, and does not impose unnecessary cost on businessesand consumers. Copyright confers monopoly privileges on copyright owners which can be used toimpose inflated retail prices on consumers, deny artists an equitable remuneration and restrictcompetition in other industries. It is therefore important that the copyright system strikes theappropriate balance.The purpose of copyright is to encourage learning and the production and distribution of creativeworks, ensuring that artists and investors are remunerated and consumers have access toinformation and culture. Copyright gives copyright owners the sole right to commercially exploit theircopyrighted works by granting the exclusive right to copy, adapt and distribute a copyrighted work.At the same time copyright exceptions and fair dealing provisions allow consumers and others, egeducational institutions and news agencies, to use copyrighted works without permission orpayment in certain circumstances. These provisions protect the public interest and allow for socialand commercial innovation.The fair dealing provision on criticism, review and news reporting is central to the functioning of theUK news media. The exceptions for the benefit of visually impaired people allow for the creation ofaccessible formats which would otherwise not be provided by the market. Technology neutralexceptions, such as that on time-shifting, allow copyright law to remain relevant as technologydevelops and in turn drive new technological innovation. The time-shifting exception was initiallyintroduced in 1988 in response to consumers using video and cassette recorders to tape broadcaststo watch/listen to at a more convenient time. Consumers now time-shift using digital recordingdevices (DRDs), which ent
ered the UK market in 2000, and are frequently provided as part of ‘plusbox’ subscription package such as BSkyB’s Sky+
. More than a quarter of UK households now owna DRD and the time-shifting exception has benefited consumers as well as allowing media and ICTcompanies to establish a lucrative new market that meets consumer demand.
Updating fair use rights for the digital age
However, with the emergence of ever new platforms and formats for creative content existingexceptions and fair dealing provisions in UK law have become outdated. UK copyright law currentlymake everyday consumer activities, such as back-up and format-shifting of music, films and e-books, illegal. Under current law parodies and pastiches, which have gained new cultural relevancein the digital mash-up culture, are also illegal. The law needs to be updated urgently if it is to remainrelevant; copyright law also need to be future proof so that primary legislation does not have to beupdated in step with technological advances. Ultimately copyright law should be relevant toconsumers, and provide certainty to the creative and the technology industry which innovates withinthe limits of the regulatory framework.
 
IP and growth:
Options for ‘fair use’
rightsin UK copyright law
 
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Over the past decade the use of copyrighted works by consumers has been t
ermed ‘fair use’,‘private copying’ or ‘non
-
commercial use’. These terms are loosely based on existing provisions,
such as the fair use defence in US law, the private use provisions in civil law European countriesand the Creative Common license terms. The boundaries of what may constitute fair use, privatecopying or non-commercial use are fluid, in popular use and law. The US fair use defence sits moreeasily with UK law and traditions than the private use provisions and accompanying levies of civillaw European countries. This is because both the UK and the US have developed their fair use andfair dealing defences on the basis of the common law principle of fair abridgement. But the openended nature of the fair use defence has in practice led to great uncertainty about what is and whatis not legal under US copyright law. Cases only make it to the courts if they have significanteconomic value and courts are therefore unable to set the boundaries of an open ended provisionas new technologies emerge.The appropriate starting point for the UK would be to map those uses it wants to legalise and thendesign the most appropriate copyright exception. The exception should be specific enough to onlylegalise uses that do not impact negatively on artists and investors in copyright, and broad enoughto remain relevant as consumers enjoy copyrighted works in an ever increasing number of formatsusing newly emerging technologies. The options outlined below are compatible with EU law. In thecase of the extended back-up exception, the format-shifting exception and the non-commercial useexception any significant economic damage incurred by the copyright owner would need to bequantified and fairly compensated. Because these exceptions allow consumers to copy content theyhave purchased or otherwise legally acquired the economic impact on copyright owners is likely tobe negligible. A recent literature review we commissioned on 
The economic impact of consumercopyright exceptions
 found that
‘
The economic evidence that format-shifting, parody and user-generated content cause any kind of economic damage to rights-holders simply does not exist.
’
 
Options for the updating of UK copyright law:
Extend the exception for back-up to any computer programmes, ie software, and all othertypes of copyrighted works
Introduce a technology neutral format-shifting exception for all types of work individualsacquired legally. Individuals are not allowed to communicate these copies to the public
Options for future proofing UK copyright law:
Extend the existing fair dealing for research and private study to all types of copyrightedworks
Introduce a technology neutral non-commercial use exception, allowing individuals to copycopyrighted works they have legally acquired for non-commercial purposesThis exception would cover all instances where consumers format-shift, space-shift, back-up orotherwise copy to enjoy the music, film, e-books etc on different hardware and software. Because itis technology neutral and applies to all works the exception would remain relevant as newtechnologies and formats emerge. This option would not legalise copyright infringement throughpeer-to-peer filesharing, as it does not allow consumers to make copyrighted works available to thepublic.
Introduce fair dealing for caricature, parody or pastiche, allowing the copying and thecommunication to the public of the caricature, parody or pasticheThis provision should be technology neutral, cover all types of work, and have the usual fair dealingcriteria applied, ie whether the use was substantial, in the public interest, and whether the use had asignificant negative economic impact on the copyright owner. Such a provision would cover usergenerated content, where users copy parts of a copyrighted work to create a recognisablecaricature, parody or pastiche and communicate their work to the public. A recent example of user-generated content that would fall under such an exception is the
ACS:Law Downfall 
caricature. EUlaw does not limit an exception for caricature, parody or pastiche to non-commercial use byindividuals, therefore the exception can also cover works such as the
Newport State of Mind 
parody
and the Conservative Party’s
Fire up the Quattro. It’s time to change
poster.
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