Law change will hit design and the consumer

A new EU-inspired law is supposed to champion designers, but design itself, along with many others, will pay the price

COMMENT: The final nail has been hammered home in changing a small but important part of the Copyright Designs & Patents Act 1988 that will see a revolution in industrial design rights. Section 52 of the Act is about to be repealed. Sounds dry?

Maybe; however, it’s anything but, because the impact on consumer choice, design innovation, reprinting of books, reissue of films and many other facets of our cultural life will be far-reaching… and bad.

I have spent a fair portion of the last four and a half years trying to put a stop to this semi-suicidal, EU-prompted law change, which, like so many chairothers, achieves the reverse of what it sets out to do, while causing even more disruption to our culture and way of life. The bit I focused on was replica furniture. The rights, balanced with trademark and patent, for original industrial designs – items produced in quantities of more than 50 – expired after 25 years. The idea behind this rule was to give creators sufficient monopoly to benefit financially from their designs before opening up competition in the market to the benefit of the consumer.

That meant that after the 25 years was up, quite a bit of post-war modern and contemporary furniture design could be copied in considerably less expensive replica form in an ‘inspired by’ format. Those wanting licensed design originals such as the Eames lounge chair and ottoman could still pay considerably more for them if they wished. As the Government acknowledged, the price differential was so great between the originals and the replicas that they served two separate and distinct markets.

What the replicas could not do legally was pass themselves off as the originals, as pirated copies do, and doubtless will continue to do; ‘inspired by’ was as close as they could get while staying on the right side of the law.

No longer.

As of the end of January 2017, the replicas will be outlawed too, with a further tranche of designs added to the list as of April 6 next year. If you want anything that looks like an Eames chair and ottoman after that date, you will have to pay around £6,815 at The Conran Shop for a licensed original instead of the Eames-inspired version you can currently get at Wallace Sacks for £599.

I wonder how Charles and Ray Eames themselves would feel about that, having made it clear that they wanted “to make the best (designs) for the most (people) for the least (amount of money)”.

Certainly Design Museum co-founder Stephen Bayley does not approve, telling The Independent that the changes are “at odds with the principles of widely available democratised luxury which make design such an interesting subject”.

Retroactive rights are causing the real problem

Instead of waiting 25 years after the first year of manufacture or marketing for these designs to open up to the wider market, the public will now have to wait until 70 years after the death of the designer. That brings the law in line with copyright for artists, photographers and musicians, but rather upsets the applecart when additional trademark and patent protections are taken into account.

What is causing the real problem is that the law will be retroactive, reviving rights in designs that expired sometimes decades ago, while awarding rights to other designs that never enjoyed them in the first place.

To give you an idea of how massive this is, let’s take an example.

The Bauhaus table lamp was designed by Karl Jucker and Wilhelm Wagenfeld in 1923-24. Had the 25-year rule applied at the time, their right would have expired in 1949. However, Wagenfeld did not die until 1990 and Jucker not till 1997. So under the new rules the right is revived and lasts until 70 years after Jucker’s death: 2067. That’s an additional 118 years after 1949 when the right would have expired originally. And that is not even the most extreme example.

The other change is the one that is likely to hit designers, because the right has also been upgraded from design right to copyright. Why is this important? Because under design right it was permissible for a designer to incorporate an element of the earlier design of a work with artistic merit into a new design as long as the overall appearance and impact of the new design was substantially different. Copyright does not allow for this ‘inspired by’ element, known in the trade as ‘follow-on design’. Breaching this new rule risks committing a criminal offence and incurring a heavy fine and prison sentence.

While the Government has assured many that matters are unlikely ever to reach such a stage, designers in the know are likely to be less sanguine, especially as the rights holders of many of the most popular designs coming back into right are mega-wealthy and powerful international corporations and highly active when it comes to enforcement and civil claims. Notice I say ‘rights holders’. That is because some of the most active of the rights holders are not designers themselves but companies that have licensed the rights from the designers or their heirs.

This is not about protecting design. It is about money.

What will make the everything so uncertain is that for a work to qualify for revived rights under the rule change, it must be deemed to have ‘artistic merit’, but the law does not define what that is. Instead, the Government has said that it will be up to the courts to decide.

Now consider that it can take up to a decade and hundreds of thousands of pounds to develop a new design and test it on the market. Many designs fail to make their mark even after all of this, so it is a costly and high-maintenance process. Imagine, then, having succeeded in all of this and launched a blockbuster new design that the public flock to. Then imagine having it snatched away as the rights holder to an earlier design claims that your new design breaches their rights because of an unintended similarity between a small element of your design and theirs. Are you going to risk a costly court action fighting an international corporation without having any certainty at all about the prospects of the case because of the obfuscation over the definition of ‘artistic merit’ or even if the challenge of copying has any validity at all?

Changes would have a “chilling” effect on innovation in design – The Government

And what incentive will those same corporations, who declare themselves champions of design, have to invest in developing new designs that might suffer the same risks?

No wonder the Government stated repeatedly that the change in the law would have a “chilling effect” on innovation in design.

If you think this is fanciful, let me tell you that it has already happened several times in high-profile cases in the world of music, costing Pharrell Williams and Robin Thicke £5 million over their hit Blurred Lines and Richard Ashcroft all his royalties and even the writing credit for his 1997 composition Bitter Sweet Symphony.

The result of all this is that the wholesale and retail sector in replica design furniture has all but collapsed in the UK. The Government had promised a five-year transitional period to allow businesses to convert to new activity – deeming such a period ‘necessary’ – but pulled the rug out from under them in October last year after the powerful rights holders based in Switzerland, Italy and the US threatened it with a Judicial Review.

Having read the Government’s February 2015 findings after a lengthy consultation process, it was clear that it viewed anything earlier than an April 2020 enforcement as disastrous for business, jobs and taxes. The complete U-turn in October 2015 never even attempted to explain or justify the change in position. I use the word ‘position’ carefully, because my reading is that the Government clearly did not change its opinion at all in the interim, a fact confirmed to me in person when I met the former Business Secretary Sajid Javid when I met him in December 2015.

So where do the museums, books, films, photographic archives and the rest come into all of the this?

Quite simply, along with the introduction of copyright for these 3D designs comes the 2D rights in them. In other words, the designs also acquire their own image rights. So that means where an Eames lounge chair and ottoman appear in a magazine photo for a room set, or in a book on design, in the background of a film, on a tea towel or mug sold through a museum shop, or are represented in any other similar way, the rights holder acquires image rights to that representation. All was not lost until now thanks to an assumption made when copyright in images extended from 50 to 70 years: Regulation 24 stipulated that any works whose copyright was “revived” as a result of this increase in term were to be “treated as licensed by the copyright owner” if the person wishing to use them gave reasonable notice, subject to payment of a reasonable royalty. Now though, that assumption is seen as being at odds with a 2001 EU directive relating to copyright because it denies exclusive rights to the rights holder to control reproduction of their work.

The result? The Government is repealing the regulation. This is potentially disastrous for film and photographic archives, which must now actively check anything they want to republish, seek out rights holders to any potentially infringing images, secure a licence for them and pay the fee.

The British Film Institute has serious concerns for the future

The task is monumental. The British Film Institute, which is the world’s largest film archive, formally objected to the changes, pointing out: “The likelihood of any rights holder whose works appear in a film being aware of these renewed rights is very low,” meaning that they would be unlikely to come forward and register a claim, leaving the BFI with the obligation of seeking them out.

“The administrative cost on the current owner/distributor of the film of meeting this obligation by ensuring clearance for all embedded designs with revived copyright will be high, the level of remuneration available to license such use will inevitably be minimal,” it concluded.

The BFI raised further concerns, which explain why some treasured films may never see the light of day again: “For companies and archives involved in re-releasing films where copyright has been revived they will lead to additional burdens on an already financially challenged sector when it wishes to provide online access to materials in collections or prepare theatrical rereleases of titles. Simply put, the information needed to secure the necessary licences for embedded designs will not be available in most cases where archives hold a copy. This will discourage organisations from making such material available in order to avoid unwitting infringements.”

One museum, thought to be the V&A, estimated that the loss in revenue from its shop, together with new restrictions on its existing collection, resulting from the changes, would cost it £850,000 in the first year alone. And the change in law will affect its collections policy moving forwards, it says. In other words, it may well stop acquiring anything that would come with such rights, which would skew the view of cultural history at one of the nation’s leading repositories for it. Will the Government be forced to replace this loss of revenue? If so, it will give the lie to its own assessment that the new law will have no significant economic impact on the public purse. And that is just one public body affected.

The greatest irony, I suppose, is that all of this is coming into force on the back of an Italian court ruling linked to an EU harmonisation directive in the months after the Brexit vote.

Understandably, one of the biggest concerns of those who voted Remain is the potential threat to the UK economy of leaving the EU. What will such a move cost in terms of jobs and tax revenues? No one can be certain at this stage. However, what they can be certain of is that here we have a highly damaging EU policy that is already costing jobs and millions in tax revenues, while inflicting very significant damage on our creative industries.