The government has been urged to overhaul the intellectual property (IP) system in the UK to ensure that new forms of digital business will thrive without falling foul of copyright law.
The much-anticipated Hargreaves Review (PDF), instigated by prime minister David Cameron last November, argues that the current UK IP system is out of date and unable to support new forms of business.
"We have found that the UK's IP framework, especially with regard to copyright, is falling behind what is needed," said report author Ian Hargreaves.
"IP law must adapt to change. Digital communications technology involves routine copying of text, images and data, meaning that copyright law has started to act as a regulatory barrier to the creation of certain kinds of new, internet-based businesses."
Hargreaves noted that, with future innovations on the horizon such as mobile payment systems and smart grid technologies, it is vital that this problem is addressed quickly to allow new types of business to grow.
"The 'internet of things' - billions of devices and components with an internet address - coupled with cloud computing, will underpin more sophisticated applications, and thereby a host of new services," he said.
"Firms will offer advice and services built on analysis of this kind of data, assuming that IP law allows them to copy and manipulate it."
Hargreaves also argued that the government must be proactive in pursing patent infringements by emerging nations, and ensure that a single European patent system becomes a reality.
"The UK should resolutely pursue its international interests in IP, particularly with respect to emerging economies such as China and India, based on positions grounded in economic evidence," he said.
"It should attach the highest priority to achieving a unified EU patent court and system, which promises significant economic benefits to UK business. The UK should work to make the Patent Cooperation Treaty a more effective vehicle for the international processing of patent applications."
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