The UK government has widely accepted Professor Hargreaves’ recommendations for renewing the UK’s intellectual property laws as set out in his independent review published in May and has revealed further details for the implementation of the long-delayed Digital Economy Act.

Chancellor George Osborne and Business secretary Vince Cable today approved the Hargreaves review, with Osborne commenting: “Our future depends on exploiting knowledge and ideas to their full potential and the Government is committed to build upon this county’s great strength in IP.

“As part of our ‘Plan for Growth’, the Government’s broad acceptance of the Hargreaves review will make it easier to use Intellectual Property to create value and growth in the economy and across our society, in ways that are fair to everyone.”

The Hargreaves report claims its modernising proposals to IP law could deliver up to £7.9bn to the UK economy by growing the UK creative industries.

Christine Payne, General Secretary of Equity and Chair of the Creative Coalition Campaign welcomed the government’s broad acceptance of the review, which she said would ensure growth in the British creative sector: “It’s good to see that we are finally making progress with measures to safeguard jobs, growth, investment and stability in the UK’s creative industries.These industries generate £60billion per year and account for 1.3 million jobs.”

But in Wednesday’s speech Vince Cable [pictured] confirmed the fears of some industry experts who opposed some of the report’s key recommendations. Most importantly, in a Digital Economy Act update, Cable approved the rejection of the webblocking practise aimed at blocking sites that allow illegal filesharing, and also approved the reform of the law around “format shifting” and the removal of restrictions on using copyright material to create parodies, remixes and spin-offs which can then be shared.

In a clearcut setback for the film industry one month after the historic newzbin2 case which saw the High Court force ISP BT to block an illegal filesharing site, business secretary Cable agreed with media regulator Ofcom that web-blocking powers are effectively unpracticable and said ministers would pursue other means of tackling online infringement.

Regulator Ofcom had said that clauses 17 and 18 of the Digital Economy Act, concerning blocking websites which show case pirated material, or allow free access to copyrighted material, were unworkable.

In June, ISPs BT and TalkTalk had been refused permission to appeal against their failed legal challenge of the Digital Economy Act which it claimed infringed internet users’ “basic rights and freedoms”, and was essentially impracticable.

But the latest admission from Cable will be music to the ears of many ISPs and will mean further talks between them and rights holders to arrive at a mutually agreeable solution.

The government’s legalisation of “format shifting” for personal use - the copying of CDs or DVDs onto music players or computers -  a modernisation already adopted by most other European countries and generally considered by consumers to be an archaism, has caused concern in industry ranks.

As has the proposed ‘one stop’ Digital Copyright Exchange, designed to help both creators and users of content to buy and sell rights transparently, with rights holders adding their content to a ‘bank’ of easy-to-licence content which would become available for use. The contentious proposal would be responsible for so-called orphaned works, content that does not have an identifiable author.

Under the Digital Copyright Exchange organisations such as the BFI would be freed up to use more anonymous archive material, but there would also be more scope for the proliferation of internet parodies, remixes and spinoffs of famous works which some rights holders claim contravene copyright laws.

Chris Marcich, President and Managing Director (EMEA), Motion Picture Association, welcomed the government’s overall response but singled out these two issues as stumbling blocks:

“We welcome the assurances regarding better enforcement at home and abroad and the measures to assist in rights clearance where there is market failure but we remain concerned about a number of recommendations which could have a negative impact on the film industry including format shifting for film and how the Digital Copyright Exchange would work in practice. We hope that the Government will work with us to ensure that any negative commercial consequences are minimised.”

The review recommended a “senior figure” be appointed to oversee the Digital Copyright Exchange design by the end of next year.

Understandably, the BFI were enthused with by the government’s commitment to the Copyright Exchange. Amanda Nevill, BFI Chief Executive said: “We welcome the Government’s endorsement of the Hargreaves recommendations as it now presents a great opportunity to create an intellectual property regime in the UK that benefits the public and those in research, education, industry and archiving alike, whilst providing effective protection of the interests and investment of rights holders. In particular we support the provisions being proposed around Orphan Works, the creation of a Digital Copyright Exchange and the limits to copyright exception as these will remove many of the barriers facing archives across the UK today.”

Lavinia Carey, director general of the British Video Association, also welcomed elements of the report but urged caution and greater clarification from the government:

“The Hargreaves Review contains a number of proposals which could, if implemented without thorough consideration, be damaging to Britain’s audiovisual industry, which must surely be unintentional. A blanket implementation of some of the general recommendations, without clear evidence that they will stimulate the British creative sector, is not the best approach and a great deal of work is required to refine some of these ideas.  

One move widely welcomed by the film and music industries today was the government’s approval of copyright infringement ‘notifications’, initially proposed in the Digital Economy Act.

Under the Digital Economy Act, film and music groups will collect data about illegal downloaders which broadband providers will be forced to match against their customer databases. Rights owners will then write to those accused to warn them they are infringing copyright and be able to impose sanctions on repeat offenders.

Notifications of wrongdoing can only be appealed against with a payment of £20, refundable if the appeal is successful.

The £20 levy is widely seen as a benefit for the industry who would otherwise likely be inundated with cost-free appeals and thus extra legal costs. 

Stewart Till, Chair of Icon, said: “Our business depends on the revenues we receive for our content. When our films appear on pirate websites without our consent, neither we nor the filmmakers receive anything back. The notice-sending regime is a fair, proportionate and entirely reasonable way to help promote a change in behaviour and point people to the legal sources of films and other media.

“Under this system internet consumers with legitimate appeals will receive a full refund of their £20 fee if they are successful. Only those illegal downloaders whose sole aim is to abuse and disrupt the education process will be put off from making appeals”.

President of the Film Distributors’ Association, Lord Puttnam CBE agreed: “The notification system in the Digital Economy Act is a vital tool to inform consumers about the legal options available for watching films and to send a strong message to persistent offenders that their behaviour is harming the prospects of film companies in the UK. I am confident that this system will help to repair the serious damage that online copyright infringement causes to our creative industries.”

However, while a similar measure has been successful in France, the first warning letters to be sent to illegal filesharers are not due in the UK until the second half of 2012.

While Cable’s announcement is meant to reinvigorate the Digital Economy Act, through clarifying and paving the way for its implementation, there are lasting confusions and battles yet to be fought such as a Court of Appeal hearing in autumn over who will pay to police the copyright crackdown (service providers and/or copyright holders) and the fact that the new code of obligations for internet providers is currently before the (anything but speedy) European Commission.

In light of these two hindrances alone it is unlikely that the long anticipated Digital Economy Act will be fully implemented until at least the end of 2012.

While the government is right to champion the Hargreaves report’s recommendations for growth and modernisation, its go-slow approach - taking more than a year to deliver the report and then respond to its findings - and the delay to the wholesale implementation of the Digital Economy Act, which was initially passed by the last Labour government, have both aggravated the film industry.

Ivan Lewis MP, Shadow Culture, Media and Sport Secretary Government, echoed a familiar sentiment today when he urged the government to “publish a clear action plan and timeline for delivery [of its IP proposals] in order to avoid the delay and drift of the past year being repeated.”