Paywalls set to tumble for publicly-funded research results

The UK's Department of Business, Innovation and Skills (BIS) has just put out a media release this morning which is has something to do with the results of investing money in research rather than with the investment process itself:

Government to open up publicly funded research  

Down come the walls ...!

Academics, businesses and the public will get easier access to publicly funded research, Universities and Science Minister David Willetts will announce today. The Government will widely accept the recommendations in a report on open access by Dame Janet Finch, a move which is likely to see a major increase in the number of taxpayer funded research papers freely available to the public.

Currently most formally published research is only available behind restricted paywalls. Reforms will see publications opened up to a greater audience, providing more opportunities for research and development across a range of sectors. They will also support the commercial exploitation of research, contributing to the Government’s economic growth agenda. Universities and Science Minister David Willetts said:

“Removing paywalls that surround taxpayer funded research will have real economic and social benefits. It will allow academics and businesses to develop and commercialise their research more easily and herald a new era of academic discovery. This development will provide exciting new opportunities and keep the UK at the forefront of global research to drive innovation and growth [Unless the removal of the paywalls is UK-only, presumably this will keep everyone else at the forefront of global research, whatever that is, too]”.

Among the recommendations that have been accepted by the Government are: 

• Moving to deliver open access through a ‘gold’ model, where article processing charges are paid upfront to cover the cost of publication [this has already begun to happen where pay-to-publish has been recognised as having substantial attractions for those who thrive on the citation of their papers]. 

• Introducing walk-in rights for the general public, so they can have free access to global research publications owned by members of the UK Publishers’ Association via public libraries. 

• Extending the licensing of access enjoyed by universities to high technology businesses for a modest charge.

The recommendations have also been welcomed by Research Councils UK (RCUK) and Funding Councils who have also set out their plans for open access. ...

This blogger hopes that the demands of easier access to research results will not be seen as an indirect form of pressure to disclose technical research results before their potential for patentability has been fully explored.

IP = weakness?

An article in Tuesday’s ‘The Times’ regarding the Apple v Samsung design litigation in the High Court concluded with the statement:

“Commentators have suggested Apple’s decision to pursue its rivals in court could be a sign of weakness.”

Is the article simply confusing the act of enforcement with the strength of the IP being enforced (the article indicates that Apple were unsuccessful both in the High Court and in patent litigation against Samsung in the US)?

Or is the suggestion that Apple must be losing significant market share if the company is willing to go to the expense of litigation in multiple territories?

Could this simply be a public relations issue for Apple, to be contrasted with the triumphant pictures of James Dyson outside the High Court following his victory over Hoover in 2000?

Or is there some other logic according to which an enforceable IP right is seen as a weakness rather than a strength?

Film finance not "trade", rules FTT

Decisions of the UK's First-Tier Tax Tribunal don't often get a mention on this blog, but Eclipse Film Partners No 35 LLP v Revenue & Customs [2012] UKFTT 270 (TC)  looked quite interesting, this being a lengthy decision of Judges Edward Sadler and John Walters QC of 20 April.


Eclipse, an investment partnership, was incorporated in October 2006 and comprised 289 members. According to its partnership deed, its business was the production, distribution, financing and exploitation of films. Eclipse struck a complex licensing agreement with Disney under which each member made substantial contributions of capital to pay the licence fee, stumping up some £50 million of their own cash and borrowing another £790 million under a 20-year facility. At the same time, the film rights were sub-licensed to a distributor, which agreed to pay annual specified sums over a 20-year period. Eclipse then entered into a marketing services agreement as a means of supervising the implementation of the distributor's release plans for the films, as well as a consultancy agreement relating to the future selection, acquisition and exploitation of films and film rights. 


In its first partnership return, Eclipse said it was carrying on a commercial trade of acquiring and exploiting film rights, although no profits had yet accrued. In reliance on the Income and Corporation Taxes Act 1988 sections 353 and 362, its members claimed tax relief in respect of the interest paid on their borrowings. 


The Commissioners for Customs and Revenue considered that there was no entitlement to tax relief because Eclipse was basically just a vehicle for speculative investment rather than a trade. Were they right?.

Dismissing Eclipse's appeal, the FTT explained that the burden was on Eclipse to establish that it was carrying on a trade, not for the Commissioners to disprove it.  The transactions and arrangements entered into by Eclipse were not a sham; indeed, they had legal effect according to their terms, and the fact that they were set up as a tax avoidance scheme did not automatically mean that they could not be trade.  The killer punch here, though, was that the way Eclipse's members financed their capital contributions and the extent to which they did so was extraneous to Eclipse's actual activities.


On these facts, said the FTT, the interdependent and coterminous licensing and distribution transactions entered into by Eclipse did not have the speculative aspect that could be expected of trading transactions. True, the sub-licence produced profit -- but the bulk of that profit was predetermined and could not be regarded as the speculative profit of a trading venture. Any additional profits which might materialise were clearly viewed as a bonus rather than a profit reasonably to be expected. In commercial terms, Eclipse did not have a "customer" but had merely been given the opportunity by Disney of participating in its licensing arrangements.

Calculating the worth of a copyright claim: "Dappa Dred"

Sullivan v Bristol Film Studios Ltd [2012] EWCA Civ 570 is a decision of the Court of Appeal, England and Wales (Lords Justices Ward, Etherton and Lewison), dating back to 3 May 2012 and on which I had intended to post a note at the time, but then got overtaken by events.

The substantive issue involved a copyright infringement claim by "Dappa Dred" (right), a hip hop artist and rap musician, in respect of a video which had been posted on YouTube for five days and which, it was calculated, would have been seen by the defendant film company's staff plus a maximum of 50 people. Sullivan sought damages of £800,000 for "breach of statutory duty, infringement of copyright and ... loss of a chance". The claim was transferred to the Chancery Division, where its value was assessed at just £50.  The defendant applied successfully to have the claim struck out on the basis that a claim for such a small sum was a disproportionate use of the court's time and resources.

What is interesting is the calculation leading to the conclusion that the claim was worth just £50 rather than the £800,000 initially sought.  The Court of Appeal explained it in detail:

13. The judge then turned to consider the question of damages. He considered the evidence about what had happened during the short period that the video had been viewable on You Tube. There was evidence before him that showed that during the period that the video had been posted on You Tube it had been viewed nearly 100 times. That is not to say that it had been viewed by 100 different people, because You Tube only records "hits" which may be multiple hits by the same person. But the judge concluded that apart from BFS' own personnel a maximum of some 50 people had seen the video. He assumed, in Mr Soloman's favour, that the video in its unfinished state was "derogatory" treatment within the meaning of the CPDA. He reasoned as follows. There were three possible consequences of 50 persons having seen the video. First, having seen its poor quality, they would decide not to buy the record when it eventually came out. On the basis of figures given to him by Mr Soloman the judge decided that Mr Soloman stood to make a maximum of £1.20 for each record sold. The judge was prepared to assume in Mr Soloman's favour that of the 50 people who saw the video, 40 would have bought the record once it had been released but for the poor quality of the video. This would produce for him a recovery of approximately £50. Second it was possible that those 40 people would themselves disparage or bad mouth the video. The judge was not prepared to make that assumption in Mr Soloman's favour since there was no evidence that anyone had done that. Nor is there now. Third, the 50 people might have liked the video so much that they bootlegged it. Again the judge was not prepared to make this assumption in Mr Soloman's favour in the absence of any evidence that this had in fact happened. Again there is no evidence now of any bootlegging. I might also add that there would in any event be a considerable overlap between this way of putting the claim and the first way, because the lost sales attributable to bootlegging would have been to some extent the mirror image of the lost sales due to people not buying the record at all.

14. The judge also said that he was not satisfied that Mr Soloman had put forward any real claim to loss of market potential. 

15. Thus he assessed the maximum possible recovery by Mr Soloman at £50.

Thanks go to Saskia (Consumer Focus) for her observation that this really was a claim that should have gone to a small claims court (the fee of bringing a small claim is about £50), reminding us that the small claims track in the Patents County Court is expected to go operational end of this year.

Ocean Tomo, Metis team up

If you've been wondering what Chicago-based Ocean Tomo has been doing since the heady days of its patent auctions, IP Finance can tell you.  The company has struck a strategic relationship with Metis Partners from Glasgow.  A media release explains that their agreement seeks to bring a new generation of corporate recovery and restructuring services to the European market, giving European companies access to the most robust intellectual asset development solutions currently available. According to Metis's CEO Stephen Robertson: 

"Our partnership will bring a new generation of corporate recovery and restructuring services to the European market as we demonstrate to companies, their bankers and investors, the real but hidden value in IP assets and how they can attract new funding using IP assets as security. Naturally, technology companies as well as IP and patent-rich businesses will be our prime targets, but any company with valuable IP, such as a well-established brand or trade secrets or know-how, could benefit from our services".

IP Finance wishes the partnership the best of luck. Anyone who can get money out of the banks these days will surely need it.

RSA Govt has turned down the music - Excon Approval

 Protecting the pot at end

The South African government has reacted to last year's Oilwell decision which had the effective of declaring that IP transfers did not require exchange control approval. In that case an attempt to void a trade mark assignment for lack of exchange control went all the way to the Supreme Court of Appeal - this blog carries the news here together with comment that celebration, for those who advocate a less restrictive environment, ought to have been nervous. And correct that turned out to be.

The government, without any consultative process, has unilaterally amended the exchange control regulations to include "intellectual property" within the definition of "capital" which has the effect of requiring all IP transfers to seek exchange control approval from the government. See Afro-IP report here.

The difficulty is that IP has not been defined and drafted to specifically include both registered and unregistered IP. This widens the scope of the regulations to possibly include amoebic concepts such as reputation, know-how and personality rights. This could mean, for instance, that a local talented footballer would need exchange control to move to join Manchester United because image rights are being "exported". There is also the question of whether IP can in fact be transferred in the sense of being moved from one country to another in the same way that other "capital" envisaged by the regulations ie money, can. The Oilwell judgement considered this at length.

The upshot is that this latest move is unlikely to be the end of the tussle. For those doing deals or creating IP in RSA, if you need to get IP out of the country, this requires the extra step of getting excon approval which, by the way, will be granted if the government is satisfied that value for value has been exchanged ie the price is fair.

A light at the end of the tunnel? An artist's view of business models in the internet era

The Pied Piper: happier times, when people
trifled with artists' business models at their peril

While lawyers, economists, policy-makers and others talk comfortably in the abstract about the need to find new business models in the music industry in the internet era, there is no-one closer to the issues raised by the need to make money than the artists themselves. In this context, the following reflections are a sobering antidote:

"The direct financial losses and effects of internet piracy to the individual musician and the record industry has been one debated over since the emergence of the internet and its usage as a medium to copy and distribute such material. In his article discussing an open letter to one student by David Lowery, Paul Resnikoff weighed in on how the industry has been impacted, utilizing David’s letter as an example of both direct and indirect effects.

Paul explains that artists cannot simply tour in order to make up for the shortages resulting from low record sales. Only the top tier of artists, often backed by major labels in the process, will make any profit from this even during dwindling record sales. The sheer costs incurred in traveling around the world, or even round a mere continent, will often not get covered during the tour, let alone generate profit on top of the costs. Touring was seen as secondary and as mere coverage for losses sustained as a result of low record sales. With constantly falling figures in sales today this alone would clearly not be enough. This is a direct result of the fall of the medium in which music is distributed; people are not buying physical media, but rather switching to digital formats, using either legal or illegal means to acquire it. This produces a challenge which the record industry has failed to address, and as pointed out in the article, digital services such as Spotify will not provide an adequate remedy to the situation as things stand in terms of the average musician. Other ways of funding have emerged, such as crowd funding services, like Kickstarter, which provide means for artists to raise funds to record music and distribute it. However such services will only provide funding to a lucky few and would not answer this issue on its own. This might not be in terms of funding alone, but due to the influx of content and the resulting lack of visibility.

Paul attributes this to the attitudes of both consumers and companies. The younger generations born slightly before or during the rise of the internet are used to free access to material and thus buy less music, both in digital and physical formats. One can say the generations with this opportunity see it as a moral right to which they are entitled. One cannot simply pin this on younger people, however, as the sale of media has also dropped among older generations. Both tend to enjoy their media via other means, such as Spotify. Companies like Google and other aggregators do pose problems for individual musicians and the industry at large. A large company is purely interested in profits, not the personal plight of the artist trying to earn his bread through his work – they provide content which is paid for, morals have no place in business.

The sphere in which musicians compete has also changed. TV shows such as X-Factor, which pump out act after act, year after year, under a humongous marketing machine are overtaking the market from the average artist. How can an individual compete with such a Goliath? Odds are they cannot.

Albeit increasingly bleak, and no matter how negatively Paul portrays the prospects of anyone trying to make it in the music industry being, this writer still sees light at the end of the tunnel. Consumers will adapt, and above all, distributers and musicians have to find new ways to benefit from the ease of access and various digital formats in which media can be handled. Once affordable and accessible ways to consume media emerge, consumers will flow towards them and amounts of media pirated should fall, although cannot be fully avoided. Cassettes did not kill the music industry as then was feared, and neither will the internet in the age of the CD".

This note has been prepared by Jani Ihalainen, a Finnish native and recent law graduate of the University of Derby. Jani, who has a keen interest in copyright law, is happy to deal directly with questions. You can email him here.