New intellectual property laws are needed to drive economic growth

25 May 2011 | Viewpoint
A UK investigation demonstrates the essential role intellectual property plays in innovation - and makes a compelling case for reform

Last week saw the much-anticipated publication of a landmark report recommending a wide-ranging overhaul of the UK’s intellectual property (IP) framework.

Led by a former journalist and academic, Ian Hargreaves, the report –‘Digital Opportunity: A Review of Intellectual Property and Growth’ – sets out a ten-point plan for a comprehensive revamp of IP law and practice.

This vision – which has much in common with the European Commission’s blueprint for reforming intellectual property rights published on Tuesday (24 May) - has significant ramifications for science and technology-based businesses across many sectors, but particularly those operating in digital, ICT and creative industries.

Hargreaves’ brief was to focus on how the UK should update its approach to intellectual property rights – and in particular how rules relating to copyright can be framed to the new realities and economic opportunities of the digital age.

But Hargreaves is first to acknowledge the need for a global perspective, and significant sections of the report deal with the requirement that reform be on an international scale – calling for decision-makers to grasp the nettle on longstanding issues such as the creation of a single EU patent system.

Indeed, the report makes it abundantly clear that fundamental change is needed at an EU level. The UK must, “Attach the highest immediate priority to achieving a unified EU patent court and EU patent system, which promises significant economic benefits to UK business.”

A single EU patent system has been on the agenda for over 40 years now, and progress so far has been painfully slow. The current lack of consensus on this issue – with Italy and Spain refusing to back recent proposals and the European Court of Justice ruling that the Commission’s plans may violate EU Law – looks set to continue.

Europe’s companies are disadvantaged

For those in doubt about what is at stake here, the report makes a persuasive case, underlining how the lack of a single patent system places European companies at a disadvantage compared to rivals in the US, India and China, who operate in unified markets. Removal of country barriers within the EU could increase national income by over £2 billion a year by 2020 in the UK alone.

Hargreaves is also right in his call for greater international cooperation on patent thickets – where clusters of overlapping patents cause a backlog in the system. One answer is workload sharing between national patent offices, with the aim of speeding up the time it takes for companies to be granted patents.

It is widely recognised that the lack of a single European patent and patent court has a disproportionate impact on smaller companies, which can neither afford the cost of taking out multiple patents in different countries, or of defending them if they are breached. Hargreaves’ report correctly acknowledges this and to outlines measures to improve access to the IP system for SMEs, through the provision of lower cost legal and commercial advice.

Companies conducting medical research will welcome the report’s recommendation that the UK should take advantage of EU-sanctioned exceptions which enable scientists and other researchers to use modern text and data mining techniques prohibited under current copyright laws.

Managing digital rights

While acknowledging the need for an international approach, Hargreaves’ report necessarily deals with more parochial issues, calling for the UK not only to catch up with the rest of the world on IP issues, but to start leading the pack.

At the centre of proposals for national reform is the creation of a Digital Copyright Exchange to act as a one-stop shop for users looking to identify copyright owners and take out licenses.  The goal, states the report, is, “To make the UK the best place in the world to do business in digital content,” adding, “It is not fanciful to suggest that such a development would be of comparable importance over time to the UK’s position as the leading service support centre in the European time zone in financial services.”

While the scope of copyright is largely harmonised internationally, rights are still licensed on a national basis. Making it easy to license digital rights is also an objective of the EU blueprint, and the Commission said on Tuesday that it will submit a proposal to create a legal framework for the multi-national management of copyright later this year.

Liberating orphan works

Such a licensing system would also help solve the problem of Europe’s “orphan works” – pieces of intellectual property that have no traceable owner and are stuck in copyright limbo. In the case of the UK for example, the British Library told the Hargreaves’ review there are “millions” of orphan works currently being held in national collections. Enabling them to be licensed could potentially unlock benefits for research, education and business.

Now minds must turn to bringing about these reforms. As Hargreaves points out, there is a huge economic incentive - full implementation of the changes outlined in his report would add between 0.3 and 0.6 per cent to the UK’s gross domestic product – equivalent to between £5.5 and £7.9 billion per annum.

It’s clear that some sectors will find the Hargreaves report more helpful than others. The focus on removing barriers to innovation thrown up by the current IP system is targeted at those industries where the pace of change is rapid, such as digital media and ICT.

That said, the Hargreaves report brings together a sensible set of measures aimed at ensuring the IP framework is fit for purpose in the 21st century. Delivering this vision will require energetic and - in the words of the report itself - “inspirational” leadership in the UK, EU and international context.

After all, good ideas don’t respect national borders.

Jonathan Ware is a consultant at PLMR, a London-based public relations agency specialising in providing public affairs and media relations advice in innovative sectors.

Never miss an update from Science|Business:   Newsletter sign-up