some default text...

Business, Innovation & Skills Committee - Minutes of EvidenceHC 367-i

Back to Report

Oral Evidence

Taken before the Business, Innovation and Skills Committee

on Tuesday 13 September 2011

Members present:

Mr Adrian Bailey (Chair)

Mr Brian Binley

Katy Clark

Margot James

Ian Murray

Mr David Ward

Nadhim Zahawi

________________

Examination of Witness

Witness: Professor Ian Hargreaves, author of Digital Opportunity: A Review of Intellectual Property and Growth, gave evidence.

Q1 Chair: Good morning and welcome, Professor Hargreaves. We were just getting concerned; we thought you might have been either arrested or, shall we say, dragged into the Home Affairs inquiry.

Professor Hargreaves: I could easily have got lost, but I am sorry if I required a louder call than some witnesses. It was not because of an unwillingness to appear before you.

Q2 Chair: It is 10.29 am. If, for our transcription purposes, you could introduce yourself, that would be helpful.

Professor Hargreaves: Yes. My name is Ian Hargreaves and I am Professor of Digital Economy at Cardiff University, and I led the review commissioned by the Government into intellectual property and growth.

Q3 Chair: Thanks very much. I will open the batting with a fairly general question. Your report says that our IP framework is "falling behind". Where do you think the main problems lie, and what categories of rights, available with enforcement, or what sort of areas would you say we are particularly behind with?

Professor Hargreaves: I think that the main problems lie in the area of copyright. The evidence to the review on patent was much less contested, although we do identify issues in patent that I think require continued close observation and thought. But in the area of copyright, I think it is clear-it is certainly clear in my judgment-that the way that UK copyright law is working and, indeed, is drafted in law predates the arrival of the commercial internet, and it has been overtaken by digital circumstance and urgently needs to be revised.

Q4 Chair: Do you think that the recommendations you make are enough to fix the system, or would you actually prefer to go further but find that you are constrained by other factors?

Professor Hargreaves: I set out to write a review that would be useful to this Government at this time. Actually, from the beginning, I said to the team that was supporting me, "I want to produce no more than 10 recommendations, and I want them to be practical and implementable". This is a controversial area. There are very important contending interests at stake, and my goal was to produce something that Government would be able to act upon with a reasonable level of support across a range of stakeholders, rather than a continuation of the polarisation on some of these issues, which I think is causing increasing damage to the British economy and will cause cumulatively further increased damage to the British economy if we don’t do something about it.

Q5 Chair: Essentially, the Government have accepted your argument, and they have a timetable to take action on many of the points by next year. Given the fact that there are, if you like, international ramifications of your policy-and, obviously, this is an area of law that varies from country to country, and some countries may be perceived as ahead and others as way behind-how realistic do you think that timetable is?

Professor Hargreaves: I think the timetable is realistic, because there are very important elements in my recommendations that require no legislation at all. An example-perhaps we will come to it, if members are interested-is the digital copyright exchange. There are also a number of legal options, open to the UK within the framework of the current EU law, that the UK has chosen not to take up, and I make the recommendation that the UK should take up those exceptions or liberalisations of the law. It is also, however, fair to say that the most ambitious aspects of the review require action, certainly at the European level, and require understanding and a favourable climate at the global level. It is very difficult to predict what is realistic and what is not realistic in those international time frames.

I made the observation, however-I could not have foreseen this-that, in the period since the review has reported, there has been a much larger extent of international interest in the review’s findings than I had, frankly, expected. I am not making the claim that all of this is laudatory and people are rushing to create their own identical reviews all over the world, but what I would note is that there is a consistent climate in favour of reform of this type in different legal settings in different parts of the world, and I think that that will be helpful to the British Government in pursuing the reform programme that it set out during August.

Q6 Chair: Your last comments really anticipated what I was going to ask-whether you think international reaction has helped or hindered-but I think you have probably covered that. Can I bring in Nadhim Zahawi?

Q7 Nadhim Zahawi: Thank you very much. Welcome, Professor. How do you respond to the criticism that you have been too quick to dismiss the so-called "lobbynomics" evidence presented by what you described as "some of the most skilful and influential lobbyists on the UK political scene"?

Professor Hargreaves: I know a skilful lobbyist when I see one. I have spent a lot of time understanding how lobbying works in my career. The remarks that you quote are not in any sense made dismissively or contemptuously. Business interests are entitled to organise to advance their point of view with Government. That is part of the way that the system works. What I do observe-and I think it is very clearly set out on pages 70 to 71 of the review-is, if you look at the results of some of the evidence-based analysis that different parties bring to questions about "Is piracy getting worse?" or "Is the following set of measures making an impact on piracy?" you get such wildly different conclusions from those pieces of research that, as a researcher, you scratch your head and wonder what might be the cause of this.

You then go to the next question, which is: "Let us have a look at the methodology, and the assumptions that were made," and all the things that you would be familiar with needing to check in order to understand the robustness of a piece of research. The problem is that, because a lot of this research is generated by private interests, it is simply un-transparent in terms of its methodology, so you do not know whether the one that comes up with conclusion A merits greater attention than research B, because you do not have access to that.

That is a real problem, and it is a problem that I think has been solved really quite effectively in other areas. If you think of crime statistics, crime reporting and crime analysis, it is a complex subject but there are reasonably well understood protocols about how you think about that. This area, I think, would merit more rigorous standards and more transparency, and certainly Government policy-making would be much, much enhanced if that were the case.

Q8 Nadhim Zahawi: It would be very useful for the Committee to have some specific examples of evidence that has been self-serving, if you could provide that.

Professor Hargreaves: I would be happy to draw that together for you.

Q9 Nadhim Zahawi: If you can, yes, please, in writing, that would be very, very useful. As the Chairman has quite rightly indicated, the Government have accepted your view that better evidence is needed, but have said that there are issues in persuading business to impart good-quality data. I think you refer to that. How do you suggest that the Government proceed on this?

Professor Hargreaves: One would hope that the Government will be able to proceed by voluntary means. It is in the interests of everybody that data are better, and there are a number of initiatives that have been tried over the years. Following the Gowers review, a research body was created, and that was not judged to have been a success and has been abandoned. There is currently a move by the university research funding councils to create a new IP research centre in the UK. So, there are various contributory factors that one could imagine.

It is also the case that, where one is talking about a part of the market that is subject to regulation, audit or oversight of some kind, the regulator or auditor often, in many circumstances, has powers to obtain information, and that might be an appropriate element in the mix as well, but I have not worked that thinking through to a level of detail such that I have, as it were, a recipe to recommend to the Committee.

Nadhim Zahawi: Chairman, do you want to come in?

Chair: I was just going to change the emphasis for a moment and bring in Brian.

Q10 Mr Binley: Thank you very much, and welcome, Professor Hargreaves. I am one of those laymen who found your report difficult to understand. You are delving into areas that many people get very confused about and, indeed, it was interesting to note that, of the many responses to the call for evidence, many of them identified enforcement as the most serious weakness in the UK’s IP framework, and it is that area that I want to touch on, if you wouldn’t mind. Can I just take the specific situation of search engines? Many search engines actually direct people automatically to free download sites rather than to sites where artists can get some reward for their work. Can you tell us how you feel that people can be paid in that situation, and can you tell us what you think we could do, in legislative terms, to correct what I see as a sizeable area of concern?

Professor Hargreaves: I sympathise with your comment about the complexity; in some respects, you approach it from a certain angle and it looks reasonably black and white, and then you pull back a bit and look at a broader landscape and it is complicated. I did not take on this review as a lifelong expert or IP lawyer or IP economist; I took it on as somebody with a longstanding interest in policy in this area and in the industries that are most affected by all of this so I have been on a learning curve as well.

Q11 Mr Binley: You understand.

Professor Hargreaves: As the Committee starts its work, I sympathise with that point of view. There is no doubt that enforcement is an important issue, and it is certainly true that enforcement is top of the agenda for many rights-holders in their discussion with Government. That is what they think Government can most helpfully address from their point of view. What the review says is that that risks being a dangerous oversimplification, because, if the public are so confused by the law for which greater enforcement is called, then the risk is that the public will be very unhappy about the manifestation of the enforcement. The starkest example of that is the unlawfulness of any of us-and I confess I have done it-shifting a file from a CD that I have bought to a computer that I own, and then to an MP3 player that I like to walk around with, and listening to it. This is unlawful, but most people do it. So, that is one respect in which the law for which greater enforcement is called does not make sense to people.

Then there is a somewhat more complex point than that, but not very much more complex. In the move from selling analogue entertainment-music, video, books and all the rest of it-to digital, an earthquake has been experienced in the industries that are affected by that, and that has not settled down yet. It will in time, but it has not settled down yet. It is very, very important that consumers feel that they are able to buy the goods and services that they want to buy, at what seem to them to be reasonable prices, under reasonable conditions. A lot of what the review says is focused upon that. It is not focused on that because I am, in some sense, denying the importance of the enforcement piece; I am trying to contextualise where enforcement fits in.

So, get the law into a place where people respect it, where it fits with what most people think is fair and reasonable, get the market working in an open way that is delivering quality services in the way that consumers are entitled to expect, and, in those circumstances, it will be a lot easier to have an enforcement regime around that law that will both command respect and, crucially, from business’s point of view, be effective. I am strongly in favour of effective enforcement of copyright law, but at the moment the conditions are not there for that to be simply achieved.

Mr Binley: Thank you. I hope that you are covered by parliamentary privilege.

Chair: I was going to say that this Committee has many roles, but it has never played the role of a confessional.

Q12 Mr Binley: Rather brave of you, I thought. Let me move on, because I want specifically to probe your thoughts about the Government’s proposals for a small claims track in the patents county court, and the thought that they should be renamed the intellectual property county court. Could you give me your reaction to that, and did you feel it was a bit premature?

Professor Hargreaves: I do not feel it is premature, but I understand why you ask the question. Renaming things unnecessarily is to be avoided, but the big renaming decision was taken a few years ago when the Patent Office was renamed the Intellectual Property Office. Intellectual property may not be an absolutely arresting X Factor name for what we are talking about, but it does cover the ground. I think that there is a case now for moving to consistency, as the court is indeed adjudicating matters that lie outside of patent, so that there is reasonably clear labelling. There is always frictional difficulty when you re-label something, but I think probably the time has come.

Q13 Mr Binley: Do we understand that this could create a massive new area of court work? I just wonder whether it has been thought through as well as it ought to have been.

Professor Hargreaves: That is also a very good question, and I am not sure that I am qualified to make a sensible prediction about that. I do not see anything in what I have recommended that will produce some sort of litigation explosion around copyright. I would hope-in fact, I believe-that the measures that I have set out in the review, and which the Government have now largely adopted, will make this a less contentious area, because, as I have explained, I think that market behaviour and business practice will be more closely aligned with consumer expectations, and there will be less to litigate about in the copyright area. But this is a litigious zone. The number of patents is growing exponentially, largely as a result of activity in the telecommunications and computer software field, and that is another set of issues touched on in the review.

Mr Binley: Thank you.

Q14 Chair: In a moment, I will bring Nadhim Zahawi back in on the digital copyright exchange. Before I do so, I must admit that I am having difficulty grasping just exactly what it is. Could you explain the concept to people like me, who are laypersons in this area, before we go into the details of questions, which I am happy to delegate to Nadhim, who I think does know?

Professor Hargreaves: The digital copyright exchange is actually, in essence, a rather simple idea. It says that we need to improve the way that the marketplace works. At the moment, the marketplace is subject to-we have already discussed it-much illicit behaviour. It is not speedy in the way that transactions are made, or it is often not speedy enough. If I am a start-up company and I want to buy the rights to some video or some music, a large number of small companies told me that they spent months and months trying to track down whom they could talk to, and could not get the basic information about what was available and within what parameters of terms it might be available, so they felt locked out by big established players in the market. Musicians told me that they feel that the way parts of the music industry work with regard to the big record companies, for example, restricts them as artists, in some cases, from selling their work in the way that they would prefer to sell it.

Think about the vast amount of digitised or, in many cases, still-to-be-digitised material-books, records, films-that is sitting in various archives in the UK. If we could liberate those-we will perhaps come to orphan works-how are they then going to be obtained, or bought and sold? There is going to have to be a mechanism. Mechanisms already exist-of course they do-in the commercial publishing sector, but the digital copyright exchange says, "For all these buying and selling operations and databases that already exist, let us introduce a requirement that they be interoperable." That will then encourage the formation of a trading space between them that is more accessible, and that can be run according to a few simple rules, which can be discussed, negotiated and set out. It will produce a market that is as open and contestable as possible. That is the key bit. Open and contestable markets are what lead to innovation, because they allow small companies to get in and challenge established businesses with new ideas and new ways of doing things. This is all about improving the way that markets work in favour of innovative players, and that, in my view, is the key to securing the additional growth that reform in this area is capable of delivering here.

Q15 Chair: Thank you. Can I just put it to you that what you are effectively saying is that for anybody-either a company or an individual-who wishes to market something that has been created by somebody else, but does not know how to get a licence to do so, this will be a portal that would enable them to access that information and presumably pay a licence or whatever in order to carry out the marketing function that they wish to do? Is that a reasonable summary?

Professor Hargreaves: It is. I would not use the word "portal", just because that is associated with a particular kind of platform. If you want an analogy, think of the analogy, say, of Amazon, where very large numbers of different merchants sell goods through an electronic trading system, where it is quick and easy to pay, and quick and easy to get delivery of the goods. It is not a perfect analogy, that, so I do not want to give the impression it is. However, it is that sort of thing, but with some public value and public regulation attached to it to ensure that it is fair, and to ensure that it can do a good job, not only for commercial sellers of books and songs and films, but for the very large amount of public material that is available to be traded in this area if only we can unlock it. The BBC itself is sitting on copyright material of vast proportions; it simply is unable to tackle the job of releasing it, because the copyright constraints are too complicated, too onerous, and take too long, and so it will not be done.

Chair: Can I bring in Nadhim Zahawi? Now we are going into some more detailed questions.

Q16 Nadhim Zahawi: Thank you, Chair. Professor, you have made the claim that the digital copyright exchange’s development is comparable in importance to the UK’s position in European financial services. That is a big claim, and I think you have talked us through what I think is an exciting project. Obviously, with these things, the devil is in the detail. There are some concerns around it. You mentioned the rules; can you talk the Committee through who will set the rules for the exchange?

Professor Hargreaves: How I have invited the Government to approach this indicates, I hope, a level of humility about the genuine challenge of making this in such a way that it works. I strongly believe that it can be done, but I have advised the Government to appoint somebody to lead this process, and that person needs to be a convenor of interests in order to find the right detailed answers to these detailed questions. I have not yet heard an objection in detail that has made me think, "Yes, actually, this is the wrong idea." When I hear the objections of detail, or the points of detail, my reaction is that, actually, I can imagine how that might be dealt with.

An interesting analogy is the so-called Google Books agreement, which flopped in the United States after several years of trying to put it together, and which was, in effect, a digital copyright exchange for books that Google proposed and a large part of the American publishing industry said it would go along with. If you look into that-it can be inspected online-it is very, very complicated. They have dispute resolution procedures, they have codes of practice, they have governance. You would need all those things in a digital copyright exchange, but you would not run into the problem that the Google Books agreement ran into in the court, where the judge threw it out in the end and said, "This gives Google too much power."

What we want in the UK is a digital copyright exchange that reflects fairly the balance of interests. That is why I think Government have a role in convening it and ensuring that it is set up in the right way. I think that that can be done. I actually think that, if it is done, it alone will not, as it were, deliver the equivalent value of the financial services sector, but when I discussed this idea internationally, before the review was published, what was said to me was that there have been a number of attempts to do something like this, but nobody has yet tried this at the level of a national jurisdiction in the way that is proposed. If it happens, I tell you that the UK’s competitors will be rushing to create something similar faster than you can say "digital copyright exchange".

I describe it in the review as a severely time-limited opportunity. It is that. Why is it severely time-limited? It is severely time-limited because, if Government do not convene a publicly minded, or publicly referenced, solution to this, the market will deliver one, but it will be delivered by the most powerful player in the market, and that is what will happen.

Q17 Nadhim Zahawi: You quite rightly pointed out that it is hugely complex. Let me put it to you through an example, because you mentioned what I think is a very positive outcome of a successful exchange, which is the BBC archive being leveraged much more widely. Take premiership football: that copyright is very valuable to the UK. The premiership is the equivalent of the size of a Facebook operation; i.e. £700 million-worth of business to the UK. The concern there would be that, if you set up this exchange, the rules could lead to the lowest common denominator driving the price of that copyright, which means a destruction in value to UK plc. Have you thought those sorts of things through?

Professor Hargreaves: Yes, I have. It is a very good point, but I think an incorrect assumption-or an incorrect fear-lies behind the point. It is true that premiership rights are of enormous value. It is true that we know where they are owned and how they are managed. It is also true that you want, to the maximum extent possible, for there to be competitive forces at play in the way that those rights are creatively used, and in the services that are provided on the back of them and so on. There is nothing about the digital copyright exchange that says anything about who should own the rights or how they should be owned, but it does say something about what kind of market we want in digital content.

To use the financial services analogy-riskily, because it is a highly imperfect analogy-you want a banking market that delivers loans to families and businesses, but you also want a market that is competitive, where you have different services that you can choose from, and you also want it to operate in a way that is structurally sound. It is about the structural soundness and openness of the market. At the moment, there are all kinds of indications that competition is not working well enough in digital content markets, and I personally think that that is damaging and I think it can be remedied.

Q18 Nadhim Zahawi: Competition on which side-on the rights ownership or the bidding side?

Professor Hargreaves: On both, I think. Where you have markets where information is obscured, and it is possible for established players to use their market power to deny legitimate information and opportunity to innovate and bid to new players, that is a matter of public concern. That is what the competition authorities partly exist in order to counter. I think that there are some unaddressed problems of a competition kind in the markets that we are talking about.

Q19 Nadhim Zahawi: Do you see that as the main challenge? What would, in your own mind, be the biggest challenge to making this a reality?

Professor Hargreaves: The biggest challenge is leadership and determination-whether we have the political determination, which the Government have committed themselves to, and whether we now can put the leadership in place. I have talked to a lot of people about this idea, including major rights-holders in the UK, and the idea, to a large extent, comes from them. I am not the author of this idea. I have not plucked it from some brilliant academic text that I read. I talked to people and I heard what they were saying about what the problem is in their own business area. Of course, they are now concerned, if it is done, that it should be done right, so it is leadership and then detail. Let us get the leadership; if we get the leadership right, we will get the detail right.

Q20 Nadhim Zahawi: Do you think it is possible to set up a system capable of coping with all copyright works, back to the complexity challenge?

Professor Hargreaves: Yes, I do. I also think that a digital copyright exchange will be a vehicle of enormous value to the thousands of small businesses that operate in this area, including very many micro-businesses, and even freelance sole-trader businesses. The creative economy is a habitat for companies of that kind-you have created the odd one yourself-and I see them being able to address international markets, to sell things in new markets that would be impenetrable to them without this kind of mechanism. Regarding the official economic impact assessment that was done on the review-I am not an economist, so what right have I got to say this?-my guess is that the estimate of the effect on UK GDP for the reform package here, 0.3-0.6% additionally on GDP, is probably understated.

Q21 Nadhim Zahawi: Let me just press you a little bit further, because you compare the system to the managing of domain names, but you know that managing domain names is a far simpler process, what with the complexity and plethora of copyright. That comparison is sadly misleading.

Professor Hargreaves: It is a comparison that is cited from the people who made the comparison. I think that was News Corp.

Q22 Nadhim Zahawi: Fair enough. Just thinking about copyright itself, do you not think that, effectively, the system becomes a registering of copyright, at odds with the idea of having minimal or zero formalities around copyright ownership?

Professor Hargreaves: Copyright is an unregistered right, and there are issues around the Berne Convention. The legal advice that the review took about all of that was that this was not problematic, but it is voluntary, so nobody is going to be required to register their work. If you want to be an author absolutely in control of every aspect of your work, and you do not care about selling it, you can be master of all you survey. But if you want to sell it in international markets, this will be very helpful to you.

Q23 Nadhim Zahawi: Then the criticism of the digital copyright exchange becomes that you are creating a two-tier system-that is, non-participants will be unfairly discriminated against.

Professor Hargreaves: I don’t think anybody would really argue that we should force people to sell things they don’t want to sell. You are entitled to withdraw a work that you are the copyright owner of from circulation. That has to be a reasonable right. I do not think that that argument holds up.

Q24 Nadhim Zahawi: You have encouraged the Government to fund the start-up of the digital copyright exchange from IPO reserves of £55 million. How much will the start-up costs be, and how will the system fund itself in the longer term, do you think?

Professor Hargreaves: I do not know what the start-up costs will be. That is a level of work that has not yet been done. There is no reason why this should be frighteningly expensive. This is not setting up the NHS patient records system; this is about securing agreement and technical capability of interoperability between systems that are currently not interoperable. That is not a trivial problem but-again, an analogy that is not perfect-if you imagine where we were on consumer finance and banking, it was unimaginable that you would be able to solve the problem of being able to go to a hole in the wall in some faraway country and get your cash out of it, or that you would be able to pay all your bills through your computer. These changes have occurred in other sectors. This sector is one that is ripe for some creative innovation.

Q25 Nadhim Zahawi: I do not disagree with you, except-back to the practicalities-how would a one-click digital copyright exchange licence deal with all the details of where and when a licence is applied, whether it can be sub-licensed or assigned, which publications it could be used in and so on? There are complexities here, and there are costs associated with those.

Professor Hargreaves: Yes. Nobody is-I am certainly not-suggesting that there is a uniform licensing process that will apply to all items of digital content. If you want the right to broadcast the Olympics, you are unlikely to achieve it with a one-click transaction on a digital copyright exchange. Of course, that is true, but it is also true that there are a lot of already standardised and very standardisable products that are susceptible to one-click and automated consumption. Many people in the content sector-the rights-holders-agree with that, but in more complex cases it will remain the case that all the digital copyright exchange will do will enable you to establish who you should be talking to, and complex transactions will remain as human-to-human things that require a lot of negotiation.

Q26 Nadhim Zahawi: Back to the international context of all this stuff, I hear what you say about the contacts you have had internationally since publication, and I also hear what you say about first-mover advantage, which is the opportunity. Could first-mover advantage end up being the Betamax of digital copyright, with the second mouse getting the cheese?

Professor Hargreaves: I do not see why that would be the case. It seems to me, from that point of view, relatively low-risk. This is not groundbreaking technology; there are massive, global, interoperable IT systems and databases and transaction platforms. These things exist. That, then, does not seem to me to be a risk, and I have not, actually, heard anybody say that that is the risk. The difficulty here is political, not technological. This is not a Betamax risk; it is a politician risk.

Q27 Nadhim Zahawi: Fine. Let us take that a step further. Political risk comes from somewhere; this does not just arrive because politicians think, "This is not something we understand" or "This is a bad idea". It comes because there is economic risk associated with it, which politicians get lobbied on. There is, then, risk associated with the digital economy, and that is something where we could end up leading the way but failing, and letting someone else then win the overall game.

Professor Hargreaves: Yes, I suppose we could. There is no reason why we should. The digital copyright exchange does not involve an invention, a piece of completely unknown ground-that is all I am saying, really. I did not express it well in my previous answer. I think that the operational and technical risk is manageable. When I use the word "political", what I really mean is the politics of the industry. Can we get enough of the right players to generate a critical mass and some momentum? Because without momentum, the biggest risk is that you have a go at this and it just fizzles out and who cares? It is just one of those things that did not work: "All rather disappointing to me, but who cares about that?" You can imagine that scenario-yes, I can imagine that scenario.

Q28 Margot James: Just a quick question: did you consider making it compulsory, or is that just not possible?

Professor Hargreaves: In so far as I considered it, I did not consider it for long. I do not think that it would be acceptable either in terms of the framework of international law or the practical reality of dealing with the business interests that we are talking about to frogmarch people into something of this kind. Also, the design of the digital copyright exchange depends upon substantial voluntary engagement.

Q29 Chair: Just before we move on, could I raise an issue? You have mentioned-I think I am quoting you correctly-a Government-appointed digital champion, but the report itself seems to point to an industry-led champion. There does seem some confusion here. Should it be Government-appointed or industry-led? Can you clarify that?

Professor Hargreaves: I will try to, yes. What I mean is that I think that Government is the place where the convening power initially sits, so I think it is the Government’s job, on the basis of a lot of consultation and conversation-which is going on right now-to identify the right person to do this, but that person has to be somebody who commands the respect of the players involved in this and, therefore, it will be industry-led. I do not imagine that the Government will ask someone to do this job who is not a respected figure in the business landscape that we are talking about, although there are important non-private business issues at stake here as well. It is not my job and I do not want to narrow down that search, but that is what I was getting at. The Government should do the choosing and the appointing, and framing the mission, and then the individual chosen-no doubt with some support-will need to get on with it.

Q30 Chair: Given the level of controversy that there seems to be within the industry, do you not think it would have been better for the Government to have, first of all, if you like, agreed that there should be a digital champion, but then set up a mechanism within the industry by which it could be appointed by players within that industry?

Professor Hargreaves: I think that there is a mechanism. It is a rather informal mechanism, but it is currently active.

Q31 Chair: Sorry, I am not sure if I understand that at all.

Professor Hargreaves: Government, as I understand it, are currently seeking to identify the right person to do this job, and they are doing that in the way that Government often appoint people to time-limited missions-for example, conducting a review of intellectual property and growth; they appointed me to do that.

Q32 Chair: Are you trying to say that the Government are taking soundings from the industry?

Professor Hargreaves: Yes. Sorry, I am not making myself clear. I am not privy to exactly what the Government are doing, but I imagine that they are examining the options, talking to people, taking soundings, and that this will eventually lead to the emergence of an appointment.

Chair: Perhaps we could ask the Government. Can I bring Ian in on licensing orphan works?

Q33 Ian Murray: Thank you, Chair. Good morning, Professor. If I may, I should like to ask you a few questions on orphan works. I suppose the main overarching question is: what would be the incentive for someone who wants to use an orphan work, or suspects that a work is an orphan work, to do any sort of proper diligence?

Professor Hargreaves: It would be set out in the law what the level of diligence required is. That is a very important point of detail for the law when it is drafted.

Q34 Ian Murray: But who would enforce that, if the person who wanted to use the orphan work-or the suspected orphan work-claimed that the work was an orphan work? Who would then police that particular aspect of it?

Professor Hargreaves: It would be policed in the way that this type of law is currently policed. It would be ultimately subject to adjudication by the courts, where there was a dispute. I am not sure whether you are suggesting a likelihood of significant numbers of disputes.

Q35 Ian Murray: How would the system then guard against misidentification?

Professor Hargreaves: Sorry-misidentification by whom?

Q36 Ian Murray: Say, for example, there was a photographic work that was identified, or misidentified, as an orphan work, would there be a risk that the creator of that work might never be aware of that work being used for profit? Maybe I could give you an example: if that was the case, could the user of misidentified orphan work potentially be insured against the creator becoming available at a later stage and wishing to participate in the profits that had been made from them?

Professor Hargreaves: The law, as drafted, will need to speak to the issue of the owner turning up later. A diligent search is required. Let us assume that a diligent search is satisfactorily completed and a work is declared orphan, and then the work is obtained and put to use by the person who has it, and then, at some point in the future, the legitimate owner of that work emerges. The law, as drafted, will need to speak to what happens in those circumstances, and that is a level of detail that probably would be better pursued with Ministers and their officials than with me, since they are now actively engaged in the business of that kind of detail, which I did not go into in the review.

Q37 Ian Murray: Would you see a role for insuring against that particular issue occurring, not just to protect the misidentification but also to protect the creator, in terms of future profits?

Professor Hargreaves: There are arguments around in the IP world in general about insurance, in which I claim no expertise, really. There are some advocates of compulsory insurance schemes, and compulsory insurance schemes have the benefit of providing a safety net for a whole class of people, but they also involve a cost, which then has to be borne somewhere in the system. Whether there is a case in this for a compulsory insurance scheme-a safety net for everybody-or a more voluntary and selective scheme is a level of detail into which I have not gone, being completely frank about it. But I am aware of these issues and these are very much the kind of issues that are going to have to be grappled with in detail at the next stage of this process.

Q38 Ian Murray: That is very useful. Your proposals obviously sit alongside the new EU directive and proposals on orphan works; it has not been enacted by member states, so the EU Commission has taken that forward. How do they sit next to each other?

Professor Hargreaves: The EU process is in progress, so these things do develop all the time. My current understanding is that the approach being taken by the EU is less far-reaching and ambitious than what I have proposed in the UK, but that it is not, I believe, necessarily inconsistent with what I have proposed in the UK. The EU sets a sort of general benchmark on orphan works here, and there is permission within different national jurisdictions for additional features of a law at the national level. My understanding is that is the way it is going at the moment.

Q39 Ian Murray: Your recommendations and features would go beyond the EU directive and proposals.

Professor Hargreaves: They would, yes.

Q40 Ian Murray: Finally, professor, how do you respond in general to the disapproval that has been shown by, in particular, the professional photographic associations about your orphan-works proposals?

Professor Hargreaves: I am saddened by it, because I have spent most of my working life in journalism and in the media. I know a lot of photographers. They are my friends. I think that some of the things that representatives of the photographers have said involve significant misunderstanding of what is proposed. The photographers, I believe, have a very large amount to gain from the package of measures in this review. I do understand, however, that there is one aspect of reform that concerns them; I understand why they are concerned and I cannot address it. That is that releasing orphan works-in my view an absolutely essential thing to do in terms of economic and cultural value, and unlocking economic and cultural value is a very, very big gain-will result in there being available on the market a lot of old material. That old material will compete with new material in some respects. That is a market fear that photographers have. They will, I am sure, in practice deal with it with customary brilliance and cunning, but I understand why they are concerned about it; I do understand that.

Q41 Chair: Why do you think the wholesale release of orphan photographic works is so economically necessary?

Professor Hargreaves: If you have an archive-I imagine the Committee will meet some of the librarians, archivists and archive-keepers-the frustration that you feel at witnessing the physical decay of the archives for which you are responsible is one fact. That does not speak to the release of them, but it speaks to the preservation of them. The release of them, I think, has unknowable value. There are many, many examples that one could give, from Shakespeare’s plays onwards, of how old texts inspire new creation and are taken into new creation. I spent some time yesterday with a group of people who are responsible for running our big art galleries and other institutions of that sort, and they are very frustrated at the position that the law has put them into. It is impossible to do sound mathematics on this, so I cannot claim sound mathematical calculations about economic benefit, but it really does not make sense to me to lock away a century of created work, simply because we are not able to say or even have a mechanism for establishing who the author is; that just seems to me, frankly, bonkers.

Q42 Chair: As a qualified librarian, I instinctively understand your position. However, you have admitted yourself that it is almost impossible to quantify the benefits. How can you justify your position in the context of saying that it will benefit growth and innovation? It does seem to me that your approach is rather subjective on this.

Professor Hargreaves: It is an approach that has been subject to analysis by economic expert impact assessors, and you can see in the supplementary paper that was published alongside the review detailed economic calculations about all of this.

Chair: I am actually going to raise that later, but I will bring in Katy Clark now, because I know you have to go, Katy.

Q43 Katy Clark: Thank you very much. Your report recommends wholesale revision of the 1998 Copyright Act. Could you explain to the Committee when you think that should happen and why?

Professor Hargreaves: That was called for by judges and senior lawyers who work with the text of this Act day in, day out, in their own practices-not an experience I have personally had. They say it is becoming not fit for purpose in terms of a piece of drafting. It sounds to me plausible, indeed likely, that that would be the case, given that it all predates the internet, and given that the internet has changed so much in the businesses and areas of cultural activity that we are talking about. I am convinced at that level that this seems to be a good idea, and in the soundings that I took when doing the review, I did not find anybody contradicting that. As to precisely when it fits into the legislative process that the Government have set out, I would imagine that it is an outcome that emerges at the relatively far horizon part of this, because first the Government have to work out the precise text on orphan works and the other changes, so I would think it would be a relatively late-arriving piece of the picture, but I am swimming out of my depth at this point.

Q44 Katy Clark: That is alright, thank you. Can you explain the concerns about text mining and medical research that have led to your recommendations on copyright exceptions?

Professor Hargreaves: Yes. I was not aware of this before I took on the review. I was aware of what text mining is, but I was not aware of the extent to which our science community and our research community feel very strongly about this. Data and text mining is the use of computers to stitch together facts from multiple data sources or documents or published works in a way that enables you to make connections. So if you are researching a particular disease or a particular structure or sub-component of the human body, you can find out what has been said about it in thousands of publications and databases in a way that human beings would struggle to do without computers.

It therefore came as something of a surprise to me to find scientists and other academics saying that copyright law is getting in the way of them doing that kind of work. The Wellcome Trust told the review that 87% of the data in the main medical publishing database in the UK are currently not available for these research techniques. I know that the publishers, some of them at least, have got a contrary point of view to that, but that was why I thought it was an important issue. Since getting to that point of understanding, I have heard a great deal more, and I think the Committee may hear more, because it is a subject that is being uncovered at the moment. I regard it as being of very high importance in the reform agenda.

Q45 Katy Clark: Are you content with what the Government are saying and what their position is on opening up further exemptions at the European/EU level?

Professor Hargreaves: Yes, I am content that they pretty closely reflect what I recommended, and I think that they represent in total a balanced and reasonable way forward that I do not think will cause insuperable difficulties for some of the parties that do not exactly like them and would not have proposed them quite this way themselves. I think they strike a reasonable balance, yes.

Q46 Katy Clark: So to what extent do you think there is room for progress at a national level? What do you think the balance is?

Professor Hargreaves: The review sets out the things-the exceptions-that we can pursue because they are already permitted at the European level, and the UK has simply failed to take them up. Examples of that would be personal format shifting and the use of a copyright exception for parody. Those are two examples under that heading.

The most ambitious proposal in the review is to try to futureproof copyright law by creating at European level a copyright exception that would be designed to permit further exceptions to copyright that do not interfere with the core expressive use of the work involved, whether that is a book, a film or whatever. This is really a different business that these new users of the internet are in. They are about stringing together points of microdata from across computerised systems and putting them to new uses. We go into that, not at huge length but in some detail, in the review. That is an argument that is going to take time to discuss, debate and pursue at the European level. I know that the Government has already started to do that, and there are interested and sympathetic voices in other European countries. This is part of the European reform agenda.

Q47 Katy Clark: In response to the previous question, you mentioned the Wellcome Trust. What do you think would happen if non-commercial research exemptions were expanded to permit university research, but the university subsequently commercialised its results? How do you think that should be dealt with?

Professor Hargreaves: I am not in favour of limiting these extensions of permission to non-commercial use. Non-commercial use of copyright is an important category in the copyright world. I think it is right that, in a number of respects, we think of that as being open to freedoms that you would not want to afford commercially. But I certainly would not want to be restricting bio-technology companies and their researchers, or pharmaceutical companies and their researchers, from this; nor, to be honest, is it realistic or desirable in the world of the university. We want our universities to be sources of research and knowledge that can be successfully commercially exploited by successful British companies. We want the knowledge to transfer into the commercial world. That is what our knowledge economy depends upon, and the argument in the review is that we are in serious danger of allowing a frozen copyright regime to get in the way of the future of Britain’s knowledge economy more broadly, rather than just the creative industries, which is what most of the argument tends to focus on.

Q48 Katy Clark: As you will appreciate, we have already received a large body of evidence in this inquiry, and we will be seeing witnesses and no doubt getting further evidence. If we were to come back with more detailed questions to you, would you be willing to deal with them? Would you be agreeable to that?

Professor Hargreaves: I certainly would, yes.

Q49 Margot James: Is the idea of setting lower patent filing and renewal fees for small and medium-sized businesses something that is just going automatically to take off, or might there be competition law issues against it?

Professor Hargreaves: It is an attractive idea to have differential fees for small companies. We talked about it quite a lot during the review. You will see in the patent section of the review that we did a lot of exploration about the relationship between fees and the problem in some cases of there being too many patents, some of them put in place in order to block the market opportunity of others rather than to protect genuine inventions. We did not in the end recommend firmly anything in that area because-

Q50 Chair: Sorry, could I just interrupt you there? Could you just explain how this does block the market opportunities of others? I did not quite follow that.

Professor Hargreaves: Yes. This is the subject of patent thickets. So, classically, what is a patent about? If somebody invents something genuinely new, they are entitled to seek a patent on it to prevent anyone else using the idea for a specific period of time. Like copyright in its origins, it is a noble and a highly economically important incentive for people to invent and to innovate. The risk, especially in the area of telecommunications, computer software and computers, is that the scale of patenting is now so large that holdings of patents are accumulated by all kinds of players, and indeed are traded on the market by the corporate interests that hold the patents, and some people argue that this is done in a way designed not to encourage innovation in the market but to block it-to make sure that nobody else can get in-in a way that is not legitimate to the protection of a genuine innovation. It is a piece of bluffing and generating of smoke around the system.

Q51 Margot James: It is a way of trying to create a monopoly and hang on to it. It is quite a recognised business defence mechanism. How optimistic are you that there would be a solution possible?

Professor Hargreaves: We have not proposed a solution to it, so I had better not say that I am optimistic that a solution can be found.

Q52 Margot James: Did you, in your investigations, find that the obstacles to the solution were so great, or was there another reason why you backed off from making a recommendation?

Professor Hargreaves: No, we backed off because the clock stopped on us. We were deep into an examination of the potential for differential fees, especially differential renewal fees, in the patenting process, which we thought might shift the balance of incentives and give people an incentive to get rid of patents at the elderly end of their holding. We were not able, in the end, to establish with sufficient evidential clarity that that would work.

Let me go back to the question that you asked me: did we think about offering small companies lower patent fees to make it easier for them to innovate and to counter the risk that they are being blocked by big players? That runs into the objection that it is quite easy for big corporates to form small corporates that turn out to be the holders of the patents. Experience counsels against seeing that as the attractive remedy that it sounds like. It is quite a tough area and the review really ends up by saying this is an area of continuing concern. This cluttering up, and the market-obscuring effect of patents, are a real danger; there are definitely real examples of it out there. We did not find a firm idea of reform that I felt the review was in a position firmly to recommend. That is why the review is where it is on that.

Q53 Margot James: That is very interesting, and it leads me to ask you about the old patent opposition system that was in place prior to 1977. Were there benefits to that system? Should all or part of it be revisited?

Professor Hargreaves: I am not dodging your question, but I do not know enough to give you a proper answer on that question. Members of the IPO and Ministers, I am sure, will be able to deal with that in writing, and if you want me to ask for that, I am happy to do that.

Margot James: We might revisit it, thank you.

Q54 Mr Ward: Good afternoon, professor. You have already made a few references to small businesses and differential fees; how did you actually obtain their views? There were some criticisms made in various places about the failure to engage with small and medium-sized enterprises. How did you obtain the views of small businesses?

Professor Hargreaves: We went to some lengths to ensure that we heard from them, because it is a well-known problem, I think, in the policy world that smaller businesses are not organised to lobby and put their views forward in the way that bigger corporate entities are. We were particularly keen to hear from the small technology companies-a particular sub-breed of SMEs. We worked with an organisation called TechHub in London to ensure that we got some direct, face-to-face engagement with that group of SMEs. Other organisations representing SMEs volunteered their views. I do not have it in my head, but the facts about numbers of submissions and so on are a matter of public record. Perhaps I should leave it at that and invite your next question.

Q55 Mr Ward: I guess I am asking if you are comfortable that the response and the views of small and medium-sized enterprises were sufficiently taken on board.

Professor Hargreaves: "Comfortable" sounds like "complacent". You can always find out more. We also did a survey of SMEs, the results of which are reported in the review. We did not do a survey of anybody else. SMEs were right in the mandate of this review, so I would certainly be disappointed if members of the Committee felt that the review had not done a good, fair and balanced job of getting to the views of SMEs, which, of course, are not identical. Certainly, I would also add that the conclusions and recommendations of the review, I think, will be of enormous importance for SMEs. Most of the innovation in an advanced economy comes from particular sets of SMEs, and everything from the recommendations on things like the unitary patent system in Europe right through to the digital copyright exchange will, in my view, be of exceptional value to SMEs, because these are the companies that are trying to get into markets that can be blocked by some of the things that we have been talking about-that are friendly to larger and more established interests.

In addition, we asked ourselves the question about the provision of IP advice services and so on to smaller companies. The going-in assumption of the review was that was not satisfactory. The work we did, including the survey we did, confirmed it was not satisfactory, and the IPO is charged under the terms of one of these recommendations now adopted by Government to take action to produce a better state of affairs on that front.

Q56 Mr Ward: You have anticipated the next question, which is about whether there is a case for expanding the IPO’s provision of support and advice, and you clearly think there was a case for doing that and a need to do that.

Professor Hargreaves: Yes. I would only hedge that in one way-I think this may have caused a little bit of confusion among some of those who have looked at the review and made comments about it-which is to ask: should it be the IPO that is doing this? I was a little wary of saying it should be the IPO that does it. There is a quote from somebody who runs a small company in here that came out of one of the TechHub meetings, I think, where he generously thanks the IPO for the fine job they are doing; he says that they have helped him "in a Government sort of way". What comes through from the SMEs, I would say, is they are wanting advice that combines legal advice and commercial advice. They are not feeling they are necessarily getting that from the lawyers, the patent attorney system, and they are not feeling they are necessarily quite getting that from the IPO, because the IPO is particularly constrained on what it can advise in legal terms. It looks to me like there is an opening here for a new kind of intermediary, but we have not-I certainly have not-bottomed out to my own satisfaction the exact prescription of what that might be or ought to be. So it is left in the review with urging the IPO to ensure that the space is well filled, which is not quite the same thing as saying to the IPO, "Here is a space. Please fill it."

Q57 Mr Ward: Presumably it is a competitive world. Are there any barriers stopping the IP practitioners being involved in providing low-cost advice to small businesses?

Professor Hargreaves: The answer is, I guess, no; there is not a barrier as such. There is not a legal barrier or any formal kind of barrier. The barriers would be the difficulty of doing the work well, the difficulty of getting into the market, and the impact on the market of the other players who are active in the market. That is something that requires a further and more detailed level of reflection than we had done by the time we were timed out on the review. It is definitely a piece of work that is needed, in my view.

Q58 Margot James: Given the fact that they are in competition with each other, is it realistic to expect these IP practitioners to help each other?

Professor Hargreaves: I am not an expert in SMEs and business advice, but the experience I have had is that there is quite a lot of evidence that peer-to-peer support in business does work, but it clearly has to be structured in the right way. There is clearly a role for Government, and there is clearly a role for the IPO here. It is about sorting out who does what. One of the things we did not go into particularly in the review, but which I noticed when we were doing the review, was that it coincided with the relatively early months of the then new coalition Government. One of the things the Government were keen to do was to stop what they saw as wasteful marketing expenditure by arms of Government or semi-autonomous public bodies and so on. So whilst we were going around asking SMEs what they wanted and could more be done and so on, at the same time the budget was being cut for the outreach to SMEs that the IPO was doing because it was all part of that. Now, I am not making a big point about that; I am just observing that there are a number of different forces in play here. If this is a high priority, and I think the Government think it is a high priority, it needs to be taken seriously in terms of the approach taken and the resources available to make that approach work.

Q59 Margot James: What about the US system of patent attorneys? They are involved in both enforcement and obtaining intellectual property rights. Could such a system work here?

Professor Hargreaves: I do not feel fully competent to answer that question. My guess at an answer would be that the litigation climate in the United States is sufficiently different from that of the UK to make one wary about a precise read-across.

Q60 Margot James: Is there a case for more multi-disciplinary partnerships in which patent attorneys work alongside patent lawyers to provide a one-stop-shop advice service?

Professor Hargreaves: Yes, I think that is what the market is looking for, but some patent attorneys will say, "We already do that. What is the problem?" The survey that we did with SMEs found that SMEs substantially think these services are not quite what they want and are too costly.

Q61 Margot James: They are, yes. The only service that is on offer is a Rolls-Royce service, when there is a market for Minis.

Professor Hargreaves: The customer is not satisfied, in which case there is a problem in the market.

Q62 Chair: You mentioned on a number of occasions, and indeed in the report you give an estimate of, the potential economic benefits of the proposals that you make. I would briefly like to probe how those benefits have been calculated.

Professor Hargreaves: Though I do not have it among my papers, they have been calculated at some length in the economic appraisal that was conducted separately from the review process itself-as it were, once the review’s work had been completed but before publication-and various economists worked on that, and they have done what economists do. They have had to make some assumptions. They have looked at the best evidence they think they can find about analogous situations or comparable situations in other countries. I think they would be the first to admit the numbers that emerge from an exercise of that kind need to be treated with caution.

Q63 Chair: Is this assessment publically available?

Professor Hargreaves: Yes it is; it is document EE. I can write to you to make it absolutely straightforward.

Chair: I think it would be helpful to have a look at that.

Professor Hargreaves: It is a 60 or 70-page document, if I recall. It is not a trivial piece of work; it is a serious piece of work.

Q64 Chair: Just going on to the IPO and the changes you are proposing for it, there are, shall we say, rather mixed assessments of the IPO, which are not totally supportive of it, but you are proposing changes; could you tell us a little more?

Professor Hargreaves: Yes. The case for change arises from what the Government are indicating they want IP policy to achieve. It reflects the emphasis that the Government are placing upon the economic importance of IP. That requires an Intellectual Property Office that is economically highly literate, and it is a matter of fact that the IPO employed its first economist in, I think, 2008. That is not unusual among international patent offices. Much the same is true of the American patent and trademark office. That struck me as surprising but what it tells you is that the debate, the issues of concern, have moved. The IPO now has a substantial and skilled economics unit within its operation.

What I said to the Government in the review is: "If you think you are going to continue to hold a view that IP and the regulatory effects it has are of material economic importance to the UK"-having looked into this, I do think that, and I think the Government think that-"then you need to make sure the IPO is mandated to do what you want it to do." At the moment the IPO does not have a formal mandate so it is not required to take into account the economic impact of all of the activities it is involved in. That reflects the institutional character and history of the IPO. The patent office was doing a particular kind of thing for a very long time, pretty much satisfactorily I think, but the game has changed. Copyright has become a major issue in advanced knowledge economies. It used not to be the case. It is now; it is going to be more so. We are not halfway through the digital revolution yet.

Q65 Chair: What do you think the role of Government is in changing that culture and fine-tuning the IPO to deliver on the economic objectives there? Do you think it will involve legislative changes?

Professor Hargreaves: It involves changing the rules.

Q66 Chair: What rules?

Professor Hargreaves: The rules about what the IPO is there for, what it does. The review says the IPO needs to be able to express opinions about copyright matters that will help to guide the litigation process, and also provide greater reassurance to users of copyright that they are not doing the wrong thing about it. That is an example. Even more important than that, in my view, although less publically visible, is the relationship between the IPO and the UK competition authorities. I am not suggesting the IPO needs to turn into a competition body itself, but I have had personally a lot of experience of Ofcom. I was a member of the Ofcom board, when it was created, for five or six years. Ofcom is a body that has got powers under the Competition Act, and the IPO is not a body that has got locus in that way under the Competition Act. I think all of that needs thinking about very carefully because the competition authorities need to be well informed-authoritatively informed-where there are issues of concern arising about uncompetitive practices in IP markets. In my view, either the IPO needs to be the body that is empowered to raise the flag about that, and attention should be paid when it does, or another body needs to have that responsibility. What the review says, and what the Government’s response has subsequently said, takes you into the territory of: "Let us give the IPO an additional flag or two for its locker." I think there is every reason to think that could work, but it is a very important issue because, if we do not have this institutional adaptability in the system, we will end up with further repetitions of this cycle of perception of policy failure, review, difficulty getting anything done, review, which has gone on back since the 1970s.

Q67 Chair: You have already touched on it in some respects, but in a number of areas you have referred to, effectively, more work needing to be done, or to the fact that you were timed out on particular issues. I can understand that when you do research there is an almost infinite potential for doing more research, but it is obvious there are still crucial issues that further work needs to be done on. Where does this report sit within the total context of the work that needs to be done? What further areas do you think are absolutely essential for the success of this report?

Professor Hargreaves: My answer to that question is that, when I took the review on and had had the opportunity to think about it for a few weeks, it felt to me as if what was needed was not a report with 75 recommendations but a report that would enable the Government to adjust the strategic course that we are taking on these issues. The strategic course adjustment-let us say it is a 25-degree adjustment, not a 45-degree or 90-degree adjustment-is material, but it is not a complete turning inside out of everything. So the most important thing is that the course adjustment is made. On that new course it will then be possible to pick up further reform as we move forward, because there is no doubt at all that market and technological circumstances are going to continue to throw up new things that will require appropriate thought and reaction by the UK’s intellectual property authorities.

To try to answer the question the way that you put it, as a quantum of the to-do list that we got through, we got through 10. How many should we have got through? Well, in every area there is more work to be done. The digital copyright exchange has to be imagined in detail and delivered. The SME assistance and support programme has to be refreshed and probably a new set of players encouraged into the market in some way. There is nowhere that the thing has ended, but I think we did succeed in the review in getting across the strategic issues here. I think the call we have made, for a 25-degree course adjustment, is about right. It is easy to say I believe it will be right and robust for the future. Of course I cannot prove that; that is an instinct, it is a judgment. But I think that is about right.

I do not think we need to be scared to death of these changes. I think we can make them, and if we make them there will be significantly more economic growth and jobs in the UK than would otherwise be the case. If we do not make them, we will find ourselves really in trouble in a world of cloud computing, where copyright regulates everything from data transactions in the insurance industry to the way that the internet is mapped and deployed as a business tool. It is very, very important, in my view. I think that the review was well timed. I think the mandate given to the review by the Government, which surprised most people at the time it was given, was well judged. When you have had the chance to reflect further on all the evidence that you will get, I hope that you will agree with that assessment.

Q68 Chair: Thank you very much, Professor Hargreaves. It has been, shall we say, quite a steep learning curve for us, and I am sure we are only halfway across it. That is a helpful start to our report. If you feel on reflection you might like to elaborate on any of the responses you have given to any of our questions, then please feel free to do so, and of course we may well come back to you for clarification on points as the inquiry proceeds. Thank you very much.

Professor Hargreaves: Thank you.

Prepared 26th June 2012