Because IPRs grant a form of monopoly, an overly rigid and inflexible IP framework can act as a barrier to innovation. When a firm has acquired exclusive rights over its innovative technology or content, other firms will be able to learn from that technology or see the content, but may be unable to use them for further innovation unless licensing can be agreed. IPRs can constrain third parties wishing to access or innovate on top of this protected knowledge or content, with potentially serious economic and social costs.
The report also notes that a considerable amount of IP policy is often not based on economic evidence, citing as examples the EU database directive and the extension of the term of copyright.
The report also spends considerable time focusing on developing new exceptions to copyright, many of which are consistent with those found in Bill C-32. The summary of the recommended exceptions:
Government should firmly resist over regulation of activities which do not prejudice the central objective of copyright, namely the provision of incentives to creators. Government should deliver copyright exceptions at national level to realise all the opportunities within the EU framework, including format shifting, parody, non-commercial research, and library archiving. The UK should also promote at EU level an exception to support text and data analytics. The UK should give a lead at EU level to develop a further copyright exception designed to build into the EU framework adaptability to new technologies. This would be designed to allow uses enabled by technology of works in ways which do not directly trade on the underlying creative and expressive purpose of the work. The Government should also legislate to ensure that these and other copyright exceptions are protected from override by contract.
The report does not recommend adopting fair use, concluding that EU constrains the UK’s ability to do so. It notes that the creative industries have thrived in the U.S. with fair use, though more than just fair use is needed.
This raises two issues from a Canadian perspective. First, Canada does not face the same constraints as the UK in moving toward fair use. A flexible fair dealing model, which would offer the benefits of U.S. fair use but retain the existing Canadian jurisprudence, would provide the optimal solution to the need for both flexibility and legal certainty in an evolving legal environment. Second, a crucial recommendation comes at the very end – The Government should also legislate to ensure that these and other copyright exceptions are protected from override by contract. Bill C-32 did not address this issue and absolutely should ensure that the copyright balance cannot be grossly distorted by contract.
There is much more here – recommendations to address orphan works, address “patent thickets” of overlapping claims that stall innovation, and the acknowledgement that there is still very little solid evidence on the impact of piracy. The report will require careful study in Canada as it is clear that the authors grappled with many of the same issues faced within our own IP reform process.