There is much common sense in the recommendations. Format shifting is something 'we all' end up doing and I have always thought it a bit ingenuous of rights owners in granting a licence that only allows intangible use of something while tying it to a physical artefact such as a CD. There is a circle to square over making this work in a European framework that asks for reasonable remuneration for rights holders in such cases (such as a blank tape levy). A right of parody possibly seems better than it actually is; the existing French right includes a requirement to be funny, which must be an interesting thing to argue in court. Data mining (by which I think they really mean indexing) should be OK as long as you can't reverse-engineer the original from the bits that you mine.
No, the 'were they listening at all?' moment comes over orphan works. In principle, the idea of being able legally to publish a work where you really can't find out who owns it or can't track them down to pay them makes sense. The difficulty is that it could open a hole big enough for unscrupulous or ignorant publishers to drive a bendy-bus through, and that was what really worried the photographers. A compromise solution was to agree to non-commercial use of orphans (whatever 'non-commercial' means exactly), but even this has been ignored. I can't see a compelling case for orphans licensing outside of the heritage sector. If you're the British Library or the BBC and you have an item in a box with no label on it that clearly has an historic relevance to your project then I can be persuaded. Using an orphan photograph of a polar bear instead of getting one from a library is not what such legislation means at all.
Two things could ameliorate this: better treatment of moral rights of authors/photographers (particularly as manifested by metadata attached to photographs on the web) and a better way for an aggrieved photographer to take action. Sadly, Hargreaves had no brief to consider moral rights, so that battle is still on-going. En passant I note that the moral dimension is perhaps more a subject for the Culture minister, Jeremy Hunt, than Business minister Vince Cable. The watchword is that copyright is the means by which culture does business, and it should be a two-way street.
There is an unexpected bit of good news in the government's response. It's on page 12:
The Government will, subject to establishing the value for money case, introduce a small claims track in the Patents County Court [which deals with all kinds of intellectual property, not just patents] for cases with £5000 or less at issue, initially at a low level of resource to gauge demand, making greater provision if it is needed.This is something I and others have been banging on about for a while: for small (ie SME) creators, the fees you get for an individual publication of your work are relatively small and so a court for such small claims is overdue.