Businesses that import, manufacture or sell replica "classic" design products in the UK (be it furniture, lamps or something else) need to be aware of the government’s latest proposals to reform copyright law, which could result in them having entirely to rethink their existing business model.
The Current Law
The government recently published the Enterprise and Regulatory Reform Bill 2012-13. The Bill will repeal Section 52 of the Copyright Designs and Patents Act 1988 (CDPA). Section 52 currently provides that when a work protected by artistic copyright has been exploited industrially (by making and selling more than 50 copies) the copyright term is automatically reduced from the usual life of the author plus 70 years to just 25 years from the date of marketing. Certain artistic articles are excluded from Section 52 (by the Copyright (Industrial Process and Excluded Articles)(No 2) Order 1989), including works of sculpture, wall plaques, medals and printed matter.
By way of example: an artist creates a painting. As an artistic work, the painting would be protected by copyright for the life of the artist plus 70 years. However, if the artist decided to licence his painting to be reproduced on T-shirts, 1,000 of which were manufactured and subsequently sold in the UK, then the duration of protection for the original painting would be reduced to 25 years, running from the end of the year in which the T-shirts were first marketed.
Clause 56 of the Enterprise and Regulatory Reform Bill 2012-13 as currently drafted would repeal Section 52 entirely. This means that a work protected by artistic copyright would continue to be protected for the life of its author plus 70 years whether the work had been industrially exploited or not.
The UK is one of only three EU Member States (the others being Estonia and Romania) which reduces the term of protection for artistic works when they are exploited industrially. This proposed reform is the result of long term lobbying by designers who want a level playing field with their European counterparts and who see Section 52 as a barrier to business for new designers thinking of starting up in the UK. They also argue that their profits are affected by the influx into the UK of inferior quality replicas sold at much lower prices, leaving them no money to invest in design innovation and long term business growth.
Implications of Reform
If enacted in its current form, Clause 56 of the Bill will have significant commercial implications. Designers will directly benefit from royalties from their designs beyond 25 years. It is the importers, manufacturers and retailers of replica classic designs that will suffer most. Their business will be based on selling arguably lower quality lookalikes of designs that are outside the 25-year term of protection. To be able to continue in operation they will have no choice but to change their business model to use only those designs not protectable by copyright, invest in their own original designs or take licences of designs which would usually have been available free of charge. All of these options, of course, have cost implications. This is a serious issue because, if these businesses get it wrong, they will face criminal prosecution.
There is also the problem of the products currently held by these businesses, the sale of which, if and when the Bill is enacted, will infringe copyright. The government has indicated that it will provide a long transitional period in which these businesses can sell off existing stock lawfully but has not yet indicated how long that is likely to be.
The Bill is still progressing through Parliament. It is due to be scrutinised by the Lords next so it is some way off from becoming law, and Clause 56 may yet be amended. However, businesses likely to be affected need to keep the progress of the Bill under close review and be ready to change their existing business model if they want to adapt to the new world following the reforms.
If you have any questions regarding the Enterprise and Regulatory Reform Bill 2012-13 or related issues, please contact your principal Squire Sanders lawyer or one of the lawyers listed in this publication.