It may have gone largely unnoticed, but the publication in December 2006 of the Gowers Review of Intellectual Property (the "Review"), is one of the most important reports issued in relation to Intellectual Property ("IP") in the United Kingdom.

As the foreword to the Review notes, "for many citizens, Intellectual Property is an obscure and distant domain – its laws shrouded in jargon and technical mystery, its applications relevant only to a specialist audience. And yet Intellectual Property is everywhere. Even a simple coffee jar relies on a range of IP rights – from patents to copyright, designs to trade marks. In the modern world, knowledge capital, more than physical capital drives the UK economy. Against the backdrop of the increasing importance of ideas, IP Rights, which protect their value, are more vital than ever."

As the authors of the Review also noted, "the increasing importance of knowledge capital is seen in its contribution to the value of firms. In 1984 the top ten firms listed on the London Stock Exchange had a combined market value of £40 billion and net assets of the same value. Advance twenty years and the asset stock of the largest firms has doubled while their market valued has increased nearly ten times. The difference in value is accounted for by intangible assets: goodwill, reputation and most importantly, knowledge capital. Knowledge based industries have become central to the UK economy – in 2004, the Creative Industries contributed 7.3% of UK Gross Value Added, and from 1997 -2004 they grew significantly quicker than the average rate of the whole economy."

The term "Intellectual Property Rights" refers to the legal protection that the law grants to the output of innovation and creativity. It encompasses: patents (monopoly rights for novel and inventive products and processes); trade marks (both registered and unregistered which are the rights granted to names, logos, branding and the like); copyright (the unregistered right granted to original literary, original musical and artistic works, sound recording and broadcasts); design rights (both registered and unregistered) and database rights (the right granted where there has been substantial investment in obtaining, verifying or presenting the contents of a database). Intellectual Property Rights however are not new, as the earliest patents in the UK were granted in the fifteenth century and copyright laws have been in existence in England since 1710. What is new is the growth and importance of Intellectual Property and the rights granted thereto.

In response to the global changes affecting the IP system, the Chancellor of the Exchequer commissioned the Gowers Review in the 2005 Pre-Budget Report. The Review was to establish whether or not the IP system in the UK was fit for purpose in the era of globalisation, digitisation and increasing economic specialisations.

The authors of the Review were of the opinion that the IP system in the UK is not in need of a radical overhaul. However, they did make recommendations to improve the UK framework for innovation. These were: -

  1. strengthening enforcement of IP Rights, whether through clamping down on piracy or trade in counterfeit goods;
  2. reducing the cost of registering and litigating IP Rights for businesses both large and small; and
  3. improving the balance and flexibility of IP Rights to allow individuals, business and institutions to use content in ways consistent with the digital age.

One area where the Review has generated media comment is in the context of the copyright protection extending to sound recordings.

Currently in the UK, copyright in lyrics and a musical score have copyright protection for the life of the author plus seventy years. Copyright in the actual recording of such receives protection only for a period of fifty years. This is of concern to many recording artists who produced sound recordings back in the 50s as the copyright in the sound recording will expire 50 years after the date the original recording was made. Most notably, artists such as Sir Cliff Richard are arguing that there should be an extension of the copyright in sound recordings from 50 years to a period of 90 years, a period that currently exists in the USA. The authors of the Review however were of the opinion that the current period of 50 years for copyright in sound recordings was appropriate and achieved the right balance between protecting the rights of performers but also at the same time protecting the needs of the public to ensure that Intellectual Property is not used to create too onerous a monopoly.

The Review found the IP system in the UK to be broadly performing satisfactory. Its key findings are noted below.

  1. Counterfeit goods and piracy are damaging the UK’s creative industry as well as threatening jobs. The Review therefore recommended: -

    • that an effective and dissuasive system of damages exist for civil IP cases to provide effective deterrent to IP infringements;
    • matching penalties in the physical and digital word for IP infringement. This was recognised as being particularly important given that so much infringement now occurs via digital media;
    • providing Trading Standards with the power and duty to enforce copyright infringements. This is to ensure the prevention of the sale of copyright infringing goods (for example counterfeit CDs) will become a duty of Trading Standards throughout the country.
  2. It was recognised that it was expensive to obtain and defend IP Rights in the UK and these costs increased when securing Rights internationally. The Review recommended: -

    • better provision of IP information to UK businesses at home and abroad. This will extend to greater information provided to business to use IP for example when they incorporate at Companies House and increased advice from the Patent Office;
    • consulting to enable fast track litigation to be used in IP cases. This will mean that there will be a cap on fees, limited disclosure and time limits that will apply to IP cases thereby reducing costs; and
    • supporting the establishment of a unitary community patent to reduce the cost of patent applications in Europe.

The Review assessed whether or not the UK IP system was still fit for purpose. The IP system in the Isle of Man is as key to the Island’s success as the system in the UK is essential to the economic success of the UK in today’s knowledge economy. Much of the legislation in the Isle of Man in this area is based on or is governed by UK legislation. For that reason it is essential that businesses on the Island are aware of any changes in the legislation in the UK in the area of IP and that if any changes are required to keep the Island competitive in this area that such are brought into force.

A copy of the Review can be found at

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.