A major new independent report to the UK Prime Minister on his country's intellectual property laws is out. Digital Opportunity: A Review of Intellectual Property and Growth could hardly make its position clearer: the UK has lost its way when it comes to copyright policy.

Here are just a few of the most telling quotes:

"We urge Government to ensure that in future, policy on Intellectual Property issues is constructed on the basis of evidence, rather than weight of lobbying." "On copyright issues, lobbying on behalf of rights owners has been more persuasive to Ministers than economic impact assessments." "Much of the data needed to develop empirical evidence on copyright and designs is privately held. It enters the public domain chiefly in the form of 'evidence' supporting the arguments of lobbyists ('lobbynomics') rather than as independently verified research conclusions."

The report, authored by journalism professor Ian Hargreaves, all but begs the government to embrace "evidence driven" IP lawmaking.

Such policies would presuppose "an institutional environment which encourages the relevant public authorities to build, present and act upon the evidence. This cannot be achieved if relevant institutions of Government lack access to the data upon which corporate lobbying and other positions are constructed." Similar concerns have been voiced by the US government given the wretched state of much antipiracy data.

Surprisingly scarce

This feedback comes as the United Kingdom is rethinking its Digital Economy Act, which gives UK courts the authority to block websites, forces ISPs to send P2P warning letters from copyright holders to consumers, and opens the gate to Internet disconnection at some point in the future. What's striking about the new report is how little confidence Hargreaves has in the process that led to the law.

The very passage of the DEA exemplified "the environment in which copyright policy is made," Hargreaves writes. Huge portions of the bill were amended or lost as the UK's General Election approached. The bill's legality was subsequently contested by BT and TalkTalk following its passage, indicating "absence of business consensus."

The survey quotes the comment of one prominent lawmaker at the time. "We have been subjected to an extraordinary degree of lobbying... The lobbying process that has gone into this Bill has been quite destructive and has done none of us very much help at all."

Then there is the fundamental question that was never answered. How much economic damage does infringement actually do?

"No one doubts that a great deal of copyright piracy is taking place, but reliable data about scale and trends is surprisingly scarce," Hargreaves writes:

Estimates of the scale of illegal digital downloads in the UK ranges between 13 per cent and 65 per cent in two studies published last year. A detailed survey of UK and international data finds that very little of it is supported by transparent research criteria. Meanwhile sales and profitability levels in most creative business sectors appear to be holding up reasonably well. We conclude that many creative businesses are experiencing turbulence from digital copyright infringement, but that at the level of the whole economy, measurable impacts are not as stark as is sometimes suggested.

We need exceptions

Chapter Five is the "must read" section of the report. It urges the UK to more fully embrace to concept of "copyright exceptions," most notably news reporting, format shifting, research, archiving, and criticism.

Hargreaves goes even further, asking his government to consider exceptions for private copying (or "performances" in the US) and parody. "And the exception for archiving falls well short of current needs," he adds. "Nor does the UK allow its great libraries to archive all digital copyright material, with the result that much of it is rotting away."

Philosophically, the document challenges the assumption that copyright law was ever intended to regulate consumer technology:

But where it can block or permit developments or applications of technology that is precisely what it becomes. When this happens, copyright’s significant economic benefits as a mechanism to incentivise individual creativity need to be measured against their negative impact in impeding innovation elsewhere in the economy. Copyright holders have a long history of resisting the emergence of technologies which threaten their interests, including audio tape recorders and VHS recorders. When the first sound recording technologies emerged, some music rights holders opposed the recording of music. At that time, it was the recorded music industry who were seen as dangerous innovators.

And so Hargreaves urges the UK to implement, at least on an interim basis, a number of copyright exception reforms. These would include a research exception to facilitate the copying of academic papers for digital distribution and an exception to facilitate the copying needed to search for research documents online.

Hargreaves also wants a "format shifting" exception. "The Government should introduce an exception to allow individuals to make copies for their own and immediate family's use on different media," the report contends. "Rights holders will be free to pursue whatever compensation the market will provide by taking account of consumers' freedom to act in this way and by setting prices accordingly."

In addition, Digital Opportunity wants a provision added to UK code preventing rights holders from trying to override any of these provisions via user contract.

Evidence, please

At minimum, the recommendations urge Britain not to do anything to make usage even more restrictive for consumers. And whatever happens, retroactive copyright term extension should be totally out of bounds.

"Economic evidence is clear that the likely deadweight loss to the economy exceeds any additional incentivising effect which might result from the extension of copyright term beyond its present levels," the document warns. "This is doubly clear for retrospective extension to copyright term, given the impossibility of incentivising the creation of already existing works, or work from artists already dead."

But making IP policy "through policies based on evidence" means that the government will "have to make institutional changes"—and it will need the ability to access actual data rather than relying on lobbynomics.