As part of its review into the suitability of IP laws for the market, the government is considering giving companies and individuals access to a digital marketplace where users can search for and purchase licences to use copyright, write Mark Lewis, partner, and Caroline Bruce, trainee solicitor at IBB Solicitors.
The Digital Copyright Exchange (DCE) is intended to create a single database of IP rights that users will be able to search free of charge. This will greatly simplify the process of purchasing bespoke software, which may be subject to the rights of multiple copyright holders.
IT departments seeking to purchase bespoke software will usually either deal directly with the software house or through a value-added reseller. In either case the purchasing company may in certain circumstances need to carry out due diligence checks to ensure that the seller has the necessary IP rights. Failure to do so may result in civil and criminal prosecution.
Companies may seek to deal with this issue with a clause in the purchase contract which provides that the company will be "held harmless" in the event that the rights in the software belong, in whole or in part, to a third party.
If drafted properly, this will ensure that the company can seek redress from the software company for any infringement of those rights. However, the company may still be faced with criminal charges and the risk that it would need to find alternative software if the copyright owner sought an injunction to prevent use of the software. If the software has become so integral to commercial operations that it has become a "line of business" application, the company may find that a critical application is suddenly held to ransom.
The proposed public database that provides free and transparent information about IP rights would clearly be welcome, as it would significantly reduce the risk of becoming subject to a potentially costly and disruptive IP claim. Businesses should, however, note that the government has made it clear that there will be no excuse for failing to check the database as part of due diligence procedures; and the suggestion appears to be that those who infringe copyright in works that are on the DCE's register might have to pay more than for infringements of rights which are not.
In-house IT departments may decide to develop their own software to provide business solutions. It may be that there does not appear to be any suitable products on the market and the company may even wish to market its software to the rest of the industry. Software development requires investment in time and money and the company will want to ensure that it achieves the best possible return.
Once the DCE is launched, it should be the first port of call to quickly and cost-effectively discover whether there are already competing products which may affect the decision to begin development. This means that not only will there be an additional way of establishing whether a gap in the market exists, but on completion of the product the company would have a clear route to market.
This new digital marketplace is predicted to generate £2.2bn a year by 2020.The aim is that the DCE will become a marketplace independent of sellers and purchasers; the government has referred to amazon.co.uk as an example. Its success will be dependent on a sufficient number of copyright holders registering their material and it is likely that incentives will be offered for them to do that.