Hargreaves (2011) - Digital Opportunity

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  • Hargreaves, I. (2011), "Digital opportunity: a review of intellectual property and growth: an independent report", Working Paper
  title={Digital opportunity: a review of intellectual property and growth: an independent report},
  author={Hargreaves, I.},
  discipline={Policy Report, Econ},
  filename={Hargreaves (2011) - Digital Opportunity.pdf}




Definition of patent thicket

"A particular danger from increasing numbers of patents is the development of ‘thickets’ of patents with overlapping claims. The result of these is that businesses working at the leading edge of a particular technology may find it difficult or even impossible to know with whom they are in conflict, or whom they should approach for a license. A current generation smartphone, for example, may well be covered by hundreds of patents owned by tens of rights holders. And these patents are often relevant to multiple phones, particularly if they cover, for example, the communications standards used. The resulting smartphone patent thicket...leads to an environment where litigation is commonplace in a market crowded with patents of overlapping scope."


"Could it be true that laws designed more than three centuries ago with the express purpose of creating economic incentives for innovation by protecting creators’ rights are today obstructing innovation and economic growth? The short answer is: yes."

The Review set out to identify 10 recommendations related to UK policy initiatives to support UK businesses, within and beyond the creative sector for job and general economic growth including:

  • Evidence: Development of the IP system needs to be driven as far as possible by objective evidence;
  • International priorities: UK should attach the highest priority to achieving unification with the EU patent system;
  • Copyright licensing: UK should (1) establish Digital Copyright Exchange to boost UK firms’ access to transparent, contestable and global digital markets, and; (2) support moves by the European Commission to establish a framework for cross border copyright licensing;
  • Orphan works: UK should legislate to enable licensing of orphan works (only those that cannot be found by search of databases involved in the Digital Copyright Exchange), thereby establishing extended collective licensing for mass licensing of orphan works;
  • Limits to copyright;
  • Patent thickets and other obstructions to innovation;
  • The design industry: In the next 12 months, the IPO should conduct an evidence based assessment of the relationship between design rights and innovation;
  • Enforcement of IP rights;
  • Small firm access to IP advice: Organize access to lower cost providers of integrated IP legal and commercial advice.
  • An IP system responsive to change: Empower the UK’s IP system to issue statutory opinions where these will help clarify copyright law. Government should ensure that the IPO publish an assessment of the impact of the measures advocated in this review by the end of 2013.

The writers considered 15 years of economics data related to Intellectual Property Rights (through linking large data sets of micro data, along with the work commissioned by the EU on the value of patents, and in the US by the venture capital industry).

The Review’s recommendations aim to support growth of the UK’s increasingly intangibles-intensive economy with:

  • A more efficient global copyright licensing system, where nothing is unusable because the rights owner cannot be found;
  • An approach to exceptions in copyright which encourages successful new digital technology businesses both within and beyond the creative industries;
  • A patent system capable of preventing the heavy demand for patents causing serious barriers to market entry in critical technologies;
  • Reliable and affordable advice for smaller companies, to enable them to thrive in the IP intensive parts of the UK economy;
  • Refreshed institutional governance of the UK’s IP system which enables it to adapt organically to change in technology and markets.

Social Welfare implications of thickets

"The UK cannot afford to let a legal framework designed around artists impede vigorous participation in these emerging business sectors. This does not mean, however, that we must put our hugely important creative industries at risk. Indeed, these businesses too need change, in the form of more open, contestable and effective global markets in digital content and a setting in which enforcement of copyright becomes effective once more."

Policy Recommendations

Patent thickets obstruct innovation. In order to limit the effects of these barriers to innovation, the Government should:

  • Take a leading role in promoting international efforts to cut patent application backlogs and manage the boom in patent applications by further extending ‘work sharing’ with patent offices in other countries;
  • Work to ensure patents are not extended into sectors, such as non-technical computer programs and business methods, which they do not currently cover, without clear evidence of benefit;
  • Investigate ways of limiting adverse consequences of patent thickets, including by working with international partners to establish a patent fee structure set by reference to innovation and growth goals rather than solely by reference to patent office running costs.
"The structure of patent renewal fees might be adjusted to encourage patentees to assess more carefully the value of maintaining lower value patents, so reducing the density of patent thickets.”