3.1 Getting the IP framework in the best possible shape to support innovation and growth in
the UK requires strong and consistent action at the international level. This is because the network of international IP treaties limits the ability of individual countries to go their own way. A sound international IP framework also helps the UK’s many IP intensive companies succeed in export markets. An open, intangibles-intensive economy like the UK’s has most to gain from healthy growth in these global markets. In 2009, the UK’s IPR reliant business sectors exported over £113 billion of goods and services.1
3.2 This means that an initiative like the international Patent Cooperation Treaty (PCT), which provides a means of making a single patent application which can then progress into patents in
up to 142 different contracting states, could be of exceptionally high value for the UK. Conversely, differences between IP regimes, including multiple and overlapping dispute resolution mechanisms, can act as a brake on trade in products protected by IPRs because of the costs and complexities they impose. This especially disadvantages SMEs, which are least equipped to deal with them.2
3.3 It is also of great importance that UK rms are able to enforce their IPRs in overseas markets, especially rapidly growing areas such as India and China. IP enforcement in China has presented dif culties for many years, but as China’s economy becomes more knowledge intensive, these dynamics will shift. China announced earlier this year that it plans to double the number of its international patent applications by 2015.3
In uence through Evidence
3.4 The principle that policy should be shaped according to evidence applies as much to international as domestic frameworks. The UK can only strengthen its position in international policy negotiations by making consistent arguments based on evidence.
Review of Intellectual Property and Growth 21
3.5 There is much to build upon. From the internationally praised Commission on Intellectual
Property Rights and Development in 2002,4 through the evidence based approach of the Gowers
Review in 2006, to the current IPO focus on linking IP policy to broader economic concerns, the UK
has exerted in uence. This in uence has, however, to some degree been undermined by an absence
of strategic consistency. An example is the failure to follow through on key recommendations of the
Gowers review, initially welcomed by Ministers but then contradicted by UK positions in international
negotiation.
3.6 If the UK is to persuade others of the value of the economic focus this review has espoused, it will need to demonstrate this in actions as well as words. Economic considerations dictate the order of priorities set out in the remainder of this section of the Review.
The European Framework
3.7 Most of the economic problems and opportunities facing the UK with regard to IP are
shared by other members of the European Union (EU). Rapid change in digital technologies affects everyone, as does the requirement for advanced economies to increase their capacity to innovate. It is no coincidence that we nd ourselves in a crucial period for IP issues at the European level.
3.8 The European Commission’s “Digital Agenda for Europe” highlighted the need to simplify copyright licensing across the EU – an issue we consider in Chapter 4.5 As this review was drawing to a close, the Commission was expected to issue a communication proposing the future direction of IP strategy. The Government should develop its position with regard to this communication based on the recommendations in this review.
Harmonisation of Rights
3.9 It is commonplace to note the large bene ts enjoyed by UK rms from unrestricted access to the single EU market. There is plenty of evidence that the size of the US home market represents a distinct advantage in terms of stimulating innovation.6 IP harmonisation in Europe is therefore a high priority.
3.10 The bene cial effects of the single market can be observed in trade marks and designs. Trade marks and design right are largely harmonised at EU level, and include both rights which cover the whole EU, administered by the Of ce for Harmonisation in the Internal Market (OHIM), along
with harmonised national rights in each country. This makes it easier to market programmes for new products across Europe, as a result of which rms build and sustain strong brand positions, supported by innovation. UK marketing services exports more than doubled from £1.15bn in 1999 to £2.43bn in 2009.7
3.11 Harmonisation has progressed less well in relationship to other rights. Copyright is partly harmonised, but in a piecemeal manner, principally regarding copyright term, copyright for computer programs, and allowable copyright exceptions (see Chapter 5). However, the most pressing EU issue is the single EU patent court and EU patent.
3.6 If the UK is to persuade others of the value of the economic focus this review has espoused, it will need to demonstrate this in actions as well as words. Economic considerations dictate the order of priorities set out in the remainder of this section of the Review.
The European Framework
3.7 Most of the economic problems and opportunities facing the UK with regard to IP are
shared by other members of the European Union (EU). Rapid change in digital technologies affects everyone, as does the requirement for advanced economies to increase their capacity to innovate. It is no coincidence that we nd ourselves in a crucial period for IP issues at the European level.
3.8 The European Commission’s “Digital Agenda for Europe” highlighted the need to simplify copyright licensing across the EU – an issue we consider in Chapter 4.5 As this review was drawing to a close, the Commission was expected to issue a communication proposing the future direction of IP strategy. The Government should develop its position with regard to this communication based on the recommendations in this review.
Harmonisation of Rights
3.9 It is commonplace to note the large bene ts enjoyed by UK rms from unrestricted access to the single EU market. There is plenty of evidence that the size of the US home market represents a distinct advantage in terms of stimulating innovation.6 IP harmonisation in Europe is therefore a high priority.
3.10 The bene cial effects of the single market can be observed in trade marks and designs. Trade marks and design right are largely harmonised at EU level, and include both rights which cover the whole EU, administered by the Of ce for Harmonisation in the Internal Market (OHIM), along
with harmonised national rights in each country. This makes it easier to market programmes for new products across Europe, as a result of which rms build and sustain strong brand positions, supported by innovation. UK marketing services exports more than doubled from £1.15bn in 1999 to £2.43bn in 2009.7
3.11 Harmonisation has progressed less well in relationship to other rights. Copyright is partly harmonised, but in a piecemeal manner, principally regarding copyright term, copyright for computer programs, and allowable copyright exceptions (see Chapter 5). However, the most pressing EU issue is the single EU patent court and EU patent.
Review of Intellectual Property and Growth 22
The EU Patent
3.12 Patents are not harmonised at EU level, but the conditions for granting patents, and hence validity, are harmonised across Europe, including the EU and additional states, through the European Patent Convention (EPC). Under this patent rights are granted by the European Patent Of ce (EPO) and by national patent of ces.
3.13 Once granted by the EPO a European Patent becomes a “bundle” of national patents, each subject to the laws of the individual countries and which must be litigated separately in each. A single patent covering Europe has been an ambition for over 40 years, but negotiations have always foundered on language or technical issues. The most recent obstacle placed in its path is that the Court of Justice of the European Communities has ruled that the current proposal for a single patent court is not compatible with the Treaty on European Union.
3.14 This lack of a single uni ed patent system creates self evident problems for innovative rms attempting to operate in the European market compared with the uni ed markets of the US, India
and China.8 It causes wasteful duplication in terms of litigation in each jurisdiction – projected private annual savings on duplicated litigation alone are estimated at between €120 million and €240 million.9 Furthermore, it increases the cost of cross border commerce. Removal of inter EU country barriers in IP could increase UK national income by over £2billion a year by 2020.10
3.15 The absence of a European patent court was seen by most submissions to the Review on this topic as the key dif culty. Although the EPO and national courts seek to avoid divergence in their decisions, there are some areas (notably computer programs as discussed in Chapter 6) where discrepancies arise. Additionally, in the absence of such a court, the need for separate litigation in each jurisdiction still remains.
3.16 The creation of a unitary EU patent was generally seen by respondents to the Review as a second order problem, with concerns that any system should offer cost and ef ciency advantages. These are important concerns – a system which is slow, or produces low quality patents or court decisions could have a signi cant economic downside.11 One particular side effect might be a further increase in density of patent thickets if application and maintenance costs are low – this issue is considered in Chapter 6. Other concerns relate to the precise con guration of a uni ed European patent system.
3.17 There is a real danger that in this long and unresolved negotiation, the best has become the enemy of the good. The burdens arising from the absence of a unitary patent and court fall most heavily on SMEs. In the competition to attract and nurture innovative high technology start ups the disadvantage of Europe (38 patent regimes) compared to the US, China and India (one) is obvious.
3.12 Patents are not harmonised at EU level, but the conditions for granting patents, and hence validity, are harmonised across Europe, including the EU and additional states, through the European Patent Convention (EPC). Under this patent rights are granted by the European Patent Of ce (EPO) and by national patent of ces.
3.13 Once granted by the EPO a European Patent becomes a “bundle” of national patents, each subject to the laws of the individual countries and which must be litigated separately in each. A single patent covering Europe has been an ambition for over 40 years, but negotiations have always foundered on language or technical issues. The most recent obstacle placed in its path is that the Court of Justice of the European Communities has ruled that the current proposal for a single patent court is not compatible with the Treaty on European Union.
3.14 This lack of a single uni ed patent system creates self evident problems for innovative rms attempting to operate in the European market compared with the uni ed markets of the US, India
and China.8 It causes wasteful duplication in terms of litigation in each jurisdiction – projected private annual savings on duplicated litigation alone are estimated at between €120 million and €240 million.9 Furthermore, it increases the cost of cross border commerce. Removal of inter EU country barriers in IP could increase UK national income by over £2billion a year by 2020.10
3.15 The absence of a European patent court was seen by most submissions to the Review on this topic as the key dif culty. Although the EPO and national courts seek to avoid divergence in their decisions, there are some areas (notably computer programs as discussed in Chapter 6) where discrepancies arise. Additionally, in the absence of such a court, the need for separate litigation in each jurisdiction still remains.
3.16 The creation of a unitary EU patent was generally seen by respondents to the Review as a second order problem, with concerns that any system should offer cost and ef ciency advantages. These are important concerns – a system which is slow, or produces low quality patents or court decisions could have a signi cant economic downside.11 One particular side effect might be a further increase in density of patent thickets if application and maintenance costs are low – this issue is considered in Chapter 6. Other concerns relate to the precise con guration of a uni ed European patent system.
3.17 There is a real danger that in this long and unresolved negotiation, the best has become the enemy of the good. The burdens arising from the absence of a unitary patent and court fall most heavily on SMEs. In the competition to attract and nurture innovative high technology start ups the disadvantage of Europe (38 patent regimes) compared to the US, China and India (one) is obvious.
Review of Intellectual Property and Growth 23
The Global Framework
3.18 Beyond the EU there are two key global fora which specialise in IP: the World Intellectual Property Organisation (WIPO) and the Trade Related aspects of Intellectual Property rights (TRIPs) Council, which is part of the World Trade Organisation (WTO).
3.19 WIPO is the United Nations (UN) agency which administers most of the global IP treaties. In recent years, divisions between the developed and developing world have led to a general stalling of discussions on a range of issues. However, the current Director General, Francis Gurry, has shown a strong commitment to reforming the organisation, focusing it upon economic issues and improving its effectiveness since his appointment in 2008.
3.20 The TRIPs Agreement is one of the agreements underlying the WTO, and ties a number of the key provisions of international treaties into the WTO dispute resolution system, meaning that violation of those provisions can lead to trade sanctions within the WTO framework. Development issues have come to the fore in recent years, particularly at the beginning of the Doha trade round, when access to medicines for developing countries was a key issue in the trade talks.
3.21 With the basic structure of rights generally established by international treaties and in particular the TRIPs Agreement, attention in international negotiations – particularly Free Trade Agreements (FTAs) and most recently the Anti Counterfeiting Trade Agreement (ACTA) – has focused on effective enforcement of rights.
3.22 It is apparent from the sometimes heated nature of discussions in WIPO and the WTO that developing countries often feel the developed world is seeking to impose an approach to IP which serves the interest of advanced economies upon countries whose economies are at an earlier stage of development. The evidence based approach advocated in this review offers a better basis upon which to seek routes through these complex questions and con icts of interest.
3.23 The evidence suggests that developed economies such as the UK’s bene t from effective IPR regimes, and in particular from effective enforcement regimes, in markets for their goods. It also appears to be the case that for low income countries with a weak scienti c and technological infrastructure, stronger IP protection has little effect on their own economic growth and may even hinder it – while having no signi cant effect on the likelihood of developed country industry seeking to sell goods there. Access to infrastructure, nance and skills can be much more important to investment decisions in low income countries than the effectiveness of the IP regime. By contrast, for middle income and emerging economies such as China, improved enforcement regimes may yield better rewards both for domestic innovation and returns to foreign rms through foreign direct investment and technical cooperation.12
3.18 Beyond the EU there are two key global fora which specialise in IP: the World Intellectual Property Organisation (WIPO) and the Trade Related aspects of Intellectual Property rights (TRIPs) Council, which is part of the World Trade Organisation (WTO).
3.19 WIPO is the United Nations (UN) agency which administers most of the global IP treaties. In recent years, divisions between the developed and developing world have led to a general stalling of discussions on a range of issues. However, the current Director General, Francis Gurry, has shown a strong commitment to reforming the organisation, focusing it upon economic issues and improving its effectiveness since his appointment in 2008.
3.20 The TRIPs Agreement is one of the agreements underlying the WTO, and ties a number of the key provisions of international treaties into the WTO dispute resolution system, meaning that violation of those provisions can lead to trade sanctions within the WTO framework. Development issues have come to the fore in recent years, particularly at the beginning of the Doha trade round, when access to medicines for developing countries was a key issue in the trade talks.
3.21 With the basic structure of rights generally established by international treaties and in particular the TRIPs Agreement, attention in international negotiations – particularly Free Trade Agreements (FTAs) and most recently the Anti Counterfeiting Trade Agreement (ACTA) – has focused on effective enforcement of rights.
3.22 It is apparent from the sometimes heated nature of discussions in WIPO and the WTO that developing countries often feel the developed world is seeking to impose an approach to IP which serves the interest of advanced economies upon countries whose economies are at an earlier stage of development. The evidence based approach advocated in this review offers a better basis upon which to seek routes through these complex questions and con icts of interest.
3.23 The evidence suggests that developed economies such as the UK’s bene t from effective IPR regimes, and in particular from effective enforcement regimes, in markets for their goods. It also appears to be the case that for low income countries with a weak scienti c and technological infrastructure, stronger IP protection has little effect on their own economic growth and may even hinder it – while having no signi cant effect on the likelihood of developed country industry seeking to sell goods there. Access to infrastructure, nance and skills can be much more important to investment decisions in low income countries than the effectiveness of the IP regime. By contrast, for middle income and emerging economies such as China, improved enforcement regimes may yield better rewards both for domestic innovation and returns to foreign rms through foreign direct investment and technical cooperation.12
1.12 As advanced economies become ever more knowledge intensive, the stakes involved in
IP are rising. Profound and far from complete economic and technological changes mean that an appropriate and enabling IP framework has become one of the prerequisites for prosperity. IP related spending has come to dominate rms’ investment across the developed world while services now dominate these economies.9 UK rms spent £137 billion on intangible investment, or investment in IP, compared to £104 billion on xed assets in 2008 (see Figure 1.1).10 This investment in IP is worth 13 per cent of market gross value added (GVA), with almost half of it covered by IPRs.11 Global trade in patent and creative industry licences alone is now worth more than £600 billion a year, over ve per cent of all world trade - and rising.12
The Innovation Ecosystem
1.13 Small and young innovative rms are playing an increasing role in job creation. They represent only six per cent of UK rms with more than 10 employees but they have created 54 per cent of all new jobs since 2002,13 although churn amongst Small and Medium Enterprises (SMEs) remains high and their contribution to net employment is lower than this.14 At the same time, larger rms continue to play a crucial but changing role in innovation, with less emphasis on in-house R&D
IP are rising. Profound and far from complete economic and technological changes mean that an appropriate and enabling IP framework has become one of the prerequisites for prosperity. IP related spending has come to dominate rms’ investment across the developed world while services now dominate these economies.9 UK rms spent £137 billion on intangible investment, or investment in IP, compared to £104 billion on xed assets in 2008 (see Figure 1.1).10 This investment in IP is worth 13 per cent of market gross value added (GVA), with almost half of it covered by IPRs.11 Global trade in patent and creative industry licences alone is now worth more than £600 billion a year, over ve per cent of all world trade - and rising.12
The Innovation Ecosystem
1.13 Small and young innovative rms are playing an increasing role in job creation. They represent only six per cent of UK rms with more than 10 employees but they have created 54 per cent of all new jobs since 2002,13 although churn amongst Small and Medium Enterprises (SMEs) remains high and their contribution to net employment is lower than this.14 At the same time, larger rms continue to play a crucial but changing role in innovation, with less emphasis on in-house R&D
Figure 1.1 UK Business Investment, £bn
Source: NESTA (2011)
Review of Intellectual Property and Growth 12
and increased partnerships with smaller companies developing new technologies. These trends
are very apparent in, for example, the biotechnology and software sectors. Hence the relationship between SMEs and larger rms can be symbiotic: they provide each other with direct support for innovative thinking and work together on R&D. Larger rms then provide routes to new and emerging markets for smaller rms.
1.14 Another shift in the innovation ecosystem is the increasing internationalisation of research – in 2007 the top 50 European corporate R&D spenders spent $51 billion of their $117 billion total R&D spend overseas.15 This shift in the landscape changes the pattern of how rms have to manage their still largely nation-speci c IPRs and indicate the importance of policy makers taking an international approach to IP systems.
The Increasing Impacts of Transaction Costs
1.15 IP transaction costs have risen as rights users navigate an ever more densely populated landscape of increasingly subdivided rights. This presents a risk analogous to the problem
familiar in the world of planning, where small ownership interests can block value generating large developments. In the patent world, a surfeit of property rights can mean that the transaction cost of acquiring permission to innovate or create new work is prohibitively high. Research shows that in certain technology elds this can cause a kind of gridlock with innovation delayed or even prevented.16 Michael Heller, an American law professor, coined the phrase “tragedy of the anticommons” to describe this situation,17 which he says has resulted in signi cant blockages in areas such as medical research.18
1.16 In the copyright area transaction costs can create similar problems. Digital technologies have brought large reductions in the cost of copying, storage and distribution for words, music, images
and all forms of data. This has the effect of making transaction costs around rights a much more signi cant element in the business equation and so, potentially, a likelier barrier to licensing and follow on innovation.
The Transforming Effects of Digital Technology
1.17 Digital technology is probably the most important and transformative technology of our time. Because digital is fundamentally an information and communication technology (ICT), intellectual property rights lie at its heart. Not only has ICT adoption and use been among the strongest drivers
of growth,19 but it has pushed content and communication technology into new uses, meaning the IP system has become part of people’s daily lives.20 This has transformed us all into regular, if not daily, copyright creators and allows rms to capture information on customers and transactions in ways that help them experiment in real time with business models and marketing approaches.21 Digital also gives rms the opportunity to market themselves locally, nationally and internationally at relatively low cost, reaching previously inaccessible customers. These are already unprecedentedly global markets, even though the internet has yet to be used directly by two thirds of the world’s population.22
are very apparent in, for example, the biotechnology and software sectors. Hence the relationship between SMEs and larger rms can be symbiotic: they provide each other with direct support for innovative thinking and work together on R&D. Larger rms then provide routes to new and emerging markets for smaller rms.
1.14 Another shift in the innovation ecosystem is the increasing internationalisation of research – in 2007 the top 50 European corporate R&D spenders spent $51 billion of their $117 billion total R&D spend overseas.15 This shift in the landscape changes the pattern of how rms have to manage their still largely nation-speci c IPRs and indicate the importance of policy makers taking an international approach to IP systems.
The Increasing Impacts of Transaction Costs
1.15 IP transaction costs have risen as rights users navigate an ever more densely populated landscape of increasingly subdivided rights. This presents a risk analogous to the problem
familiar in the world of planning, where small ownership interests can block value generating large developments. In the patent world, a surfeit of property rights can mean that the transaction cost of acquiring permission to innovate or create new work is prohibitively high. Research shows that in certain technology elds this can cause a kind of gridlock with innovation delayed or even prevented.16 Michael Heller, an American law professor, coined the phrase “tragedy of the anticommons” to describe this situation,17 which he says has resulted in signi cant blockages in areas such as medical research.18
1.16 In the copyright area transaction costs can create similar problems. Digital technologies have brought large reductions in the cost of copying, storage and distribution for words, music, images
and all forms of data. This has the effect of making transaction costs around rights a much more signi cant element in the business equation and so, potentially, a likelier barrier to licensing and follow on innovation.
The Transforming Effects of Digital Technology
1.17 Digital technology is probably the most important and transformative technology of our time. Because digital is fundamentally an information and communication technology (ICT), intellectual property rights lie at its heart. Not only has ICT adoption and use been among the strongest drivers
of growth,19 but it has pushed content and communication technology into new uses, meaning the IP system has become part of people’s daily lives.20 This has transformed us all into regular, if not daily, copyright creators and allows rms to capture information on customers and transactions in ways that help them experiment in real time with business models and marketing approaches.21 Digital also gives rms the opportunity to market themselves locally, nationally and internationally at relatively low cost, reaching previously inaccessible customers. These are already unprecedentedly global markets, even though the internet has yet to be used directly by two thirds of the world’s population.22
Review of Intellectual Property and Growth 13
1.18 Because copyright governs the right to own and use data and information, as well as the output of authors, musicians, photographers and lm makers, copyright law is now of primary interest to players across the whole of the knowledge economy, not just those involved in the creative industries. Digital technologies are based on copying, so copyright becomes their regulator: a role it was never designed to perform.
Services and the New Innovation Process
1.19 The services which provide most jobs in advanced economies are being changed in other ways by digital technology. Innovations in the insurance industry, for example, rely upon improved data from medicine, demographics and pro ling of individual customer lifestyles. Risk calculations applied to premiums for farmers and event organisers rely upon improved data analysis of weather patterns. Sophisticated assessment of safer cars and better roads can be factored into motor insurance judgments. Understanding these connections and computing the related business risks requires knowledge of what happens at boundaries between systems and the ability to analyse large quantities of data from what, until recently, were separate industries and sectors.
1.20 Collaborative and more “open” distributed innovation processes are especially important because services are not produced in the laboratories and factories of the industrial R&D arena where they can be tested and optimised. Services are usually produced at the point at which they are consumed: the act of consumption rather than invention is the focal point for innovation.
1.21 New services are therefore developed using a “market facing” approach, often connected
to information databases generated by people and organisations that articulate and express their requirements and demands as they experience the innovation. This is sometimes described as a more democratic approach to innovation, where companies trial different approaches – such as beta versions of web pages – and respond to user feedback. It also, however, frequently relies upon the ability to analyse large and complex volumes of data copied between machines, potentially raising multiple copyright issues.
1.22 The nature of services innovation implies that answers to technical problems will not lie exclusively within research institutions or companies with proprietary R&D cultures and the means to manage and protect IP. Instead, they will emerge through integration of ideas from a wide range of organisations, some of whom may consider managing IPR to be an unacceptable obstacle in a high value business, raising further challenges to traditional concepts of ownership of IP.
The Next Wave – Cloud Computing and the Internet of Things
1.23 The next wave of digital technologies and services is likely to create opportunities and disruptions in a very broad range of industries. The internet of things – billions of devices and components with an internet address, enabling them to communicate in massive sensing systems – coupled with cloud computing, will underpin more sophisticated applications, and thereby a host of new services: digital wallets will replace cheques and credit cards; personalised electronic adverts will compete with static hoardings; transport, electricity, power and water systems will provide a continuous
Services and the New Innovation Process
1.19 The services which provide most jobs in advanced economies are being changed in other ways by digital technology. Innovations in the insurance industry, for example, rely upon improved data from medicine, demographics and pro ling of individual customer lifestyles. Risk calculations applied to premiums for farmers and event organisers rely upon improved data analysis of weather patterns. Sophisticated assessment of safer cars and better roads can be factored into motor insurance judgments. Understanding these connections and computing the related business risks requires knowledge of what happens at boundaries between systems and the ability to analyse large quantities of data from what, until recently, were separate industries and sectors.
1.20 Collaborative and more “open” distributed innovation processes are especially important because services are not produced in the laboratories and factories of the industrial R&D arena where they can be tested and optimised. Services are usually produced at the point at which they are consumed: the act of consumption rather than invention is the focal point for innovation.
1.21 New services are therefore developed using a “market facing” approach, often connected
to information databases generated by people and organisations that articulate and express their requirements and demands as they experience the innovation. This is sometimes described as a more democratic approach to innovation, where companies trial different approaches – such as beta versions of web pages – and respond to user feedback. It also, however, frequently relies upon the ability to analyse large and complex volumes of data copied between machines, potentially raising multiple copyright issues.
1.22 The nature of services innovation implies that answers to technical problems will not lie exclusively within research institutions or companies with proprietary R&D cultures and the means to manage and protect IP. Instead, they will emerge through integration of ideas from a wide range of organisations, some of whom may consider managing IPR to be an unacceptable obstacle in a high value business, raising further challenges to traditional concepts of ownership of IP.
The Next Wave – Cloud Computing and the Internet of Things
1.23 The next wave of digital technologies and services is likely to create opportunities and disruptions in a very broad range of industries. The internet of things – billions of devices and components with an internet address, enabling them to communicate in massive sensing systems – coupled with cloud computing, will underpin more sophisticated applications, and thereby a host of new services: digital wallets will replace cheques and credit cards; personalised electronic adverts will compete with static hoardings; transport, electricity, power and water systems will provide a continuous
3.18 Beyond the EU there are two key global fora which specialise in IP: the World Intellectual Property Organisation (WIPO) and the Trade Related aspects of Intellectual Property rights (TRIPs) Council, which is part of the World Trade Organisation (WTO).
3.19 WIPO is the United Nations (UN) agency which administers most of the global IP treaties. In recent years, divisions between the developed and developing world have led to a general stalling of discussions on a range of issues. However, the current Director General, Francis Gurry, has shown a strong commitment to reforming the organisation, focusing it upon economic issues and improving its effectiveness since his appointment in 2008.
3.20 The TRIPs Agreement is one of the agreements underlying the WTO, and ties a number of the key provisions of international treaties into the WTO dispute resolution system, meaning that violation of those provisions can lead to trade sanctions within the WTO framework. Development issues have come to the fore in recent years, particularly at the beginning of the Doha trade round, when access to medicines for developing countries was a key issue in the trade talks.
3.21 With the basic structure of rights generally established by international treaties and in particular the TRIPs Agreement, attention in international negotiations – particularly Free Trade Agreements (FTAs) and most recently the Anti Counterfeiting Trade Agreement (ACTA) – has focused on effective enforcement of rights.
3.22 It is apparent from the sometimes heated nature of discussions in WIPO and the WTO that developing countries often feel the developed world is seeking to impose an approach to IP which serves the interest of advanced economies upon countries whose economies are at an earlier stage of development. The evidence based approach advocated in this review offers a better basis upon which to seek routes through these complex questions and con icts of interest.
3.23 The evidence suggests that developed economies such as the UK’s bene t from effective IPR regimes, and in particular from effective enforcement regimes, in markets for their goods. It also appears to be the case that for low income countries with a weak scienti c and technological infrastructure, stronger IP protection has little effect on their own economic growth and may even hinder it – while having no signi cant effect on the likelihood of developed country industry seeking to sell goods there. Access to infrastructure, nance and skills can be much more important to investment decisions in low income countries than the effectiveness of the IP regime. By contrast, for middle income and emerging economies such as China, improved enforcement regimes may yield better rewards both for domestic innovation and returns to foreign rms through foreign direct investment and technical cooperation.12
3.19 WIPO is the United Nations (UN) agency which administers most of the global IP treaties. In recent years, divisions between the developed and developing world have led to a general stalling of discussions on a range of issues. However, the current Director General, Francis Gurry, has shown a strong commitment to reforming the organisation, focusing it upon economic issues and improving its effectiveness since his appointment in 2008.
3.20 The TRIPs Agreement is one of the agreements underlying the WTO, and ties a number of the key provisions of international treaties into the WTO dispute resolution system, meaning that violation of those provisions can lead to trade sanctions within the WTO framework. Development issues have come to the fore in recent years, particularly at the beginning of the Doha trade round, when access to medicines for developing countries was a key issue in the trade talks.
3.21 With the basic structure of rights generally established by international treaties and in particular the TRIPs Agreement, attention in international negotiations – particularly Free Trade Agreements (FTAs) and most recently the Anti Counterfeiting Trade Agreement (ACTA) – has focused on effective enforcement of rights.
3.22 It is apparent from the sometimes heated nature of discussions in WIPO and the WTO that developing countries often feel the developed world is seeking to impose an approach to IP which serves the interest of advanced economies upon countries whose economies are at an earlier stage of development. The evidence based approach advocated in this review offers a better basis upon which to seek routes through these complex questions and con icts of interest.
3.23 The evidence suggests that developed economies such as the UK’s bene t from effective IPR regimes, and in particular from effective enforcement regimes, in markets for their goods. It also appears to be the case that for low income countries with a weak scienti c and technological infrastructure, stronger IP protection has little effect on their own economic growth and may even hinder it – while having no signi cant effect on the likelihood of developed country industry seeking to sell goods there. Access to infrastructure, nance and skills can be much more important to investment decisions in low income countries than the effectiveness of the IP regime. By contrast, for middle income and emerging economies such as China, improved enforcement regimes may yield better rewards both for domestic innovation and returns to foreign rms through foreign direct investment and technical cooperation.12
1.12 As advanced economies become ever more knowledge intensive, the stakes involved in
IP are rising. Profound and far from complete economic and technological changes mean that an appropriate and enabling IP framework has become one of the prerequisites for prosperity. IP related spending has come to dominate rms’ investment across the developed world while services now dominate these economies.9 UK rms spent £137 billion on intangible investment, or investment in IP, compared to £104 billion on xed assets in 2008 (see Figure 1.1).10 This investment in IP is worth 13 per cent of market gross value added (GVA), with almost half of it covered by IPRs.11 Global trade in patent and creative industry licences alone is now worth more than £600 billion a year, over ve per cent of all world trade - and rising.12
The Innovation Ecosystem
1.13 Small and young innovative rms are playing an increasing role in job creation. They represent only six per cent of UK rms with more than 10 employees but they have created 54 per cent of all new jobs since 2002,13 although churn amongst Small and Medium Enterprises (SMEs) remains high and their contribution to net employment is lower than this.14 At the same time, larger rms continue to play a crucial but changing role in innovation, with less emphasis on in-house R&D
IP are rising. Profound and far from complete economic and technological changes mean that an appropriate and enabling IP framework has become one of the prerequisites for prosperity. IP related spending has come to dominate rms’ investment across the developed world while services now dominate these economies.9 UK rms spent £137 billion on intangible investment, or investment in IP, compared to £104 billion on xed assets in 2008 (see Figure 1.1).10 This investment in IP is worth 13 per cent of market gross value added (GVA), with almost half of it covered by IPRs.11 Global trade in patent and creative industry licences alone is now worth more than £600 billion a year, over ve per cent of all world trade - and rising.12
The Innovation Ecosystem
1.13 Small and young innovative rms are playing an increasing role in job creation. They represent only six per cent of UK rms with more than 10 employees but they have created 54 per cent of all new jobs since 2002,13 although churn amongst Small and Medium Enterprises (SMEs) remains high and their contribution to net employment is lower than this.14 At the same time, larger rms continue to play a crucial but changing role in innovation, with less emphasis on in-house R&D
Figure 1.1 UK Business Investment, £bn
Source: NESTA (2011)
Review of Intellectual Property and Growth 12
and increased partnerships with smaller companies developing new technologies. These trends
are very apparent in, for example, the biotechnology and software sectors. Hence the relationship between SMEs and larger rms can be symbiotic: they provide each other with direct support for innovative thinking and work together on R&D. Larger rms then provide routes to new and emerging markets for smaller rms.
1.14 Another shift in the innovation ecosystem is the increasing internationalisation of research – in 2007 the top 50 European corporate R&D spenders spent $51 billion of their $117 billion total R&D spend overseas.15 This shift in the landscape changes the pattern of how rms have to manage their still largely nation-speci c IPRs and indicate the importance of policy makers taking an international approach to IP systems.
The Increasing Impacts of Transaction Costs
1.15 IP transaction costs have risen as rights users navigate an ever more densely populated landscape of increasingly subdivided rights. This presents a risk analogous to the problem
familiar in the world of planning, where small ownership interests can block value generating large developments. In the patent world, a surfeit of property rights can mean that the transaction cost of acquiring permission to innovate or create new work is prohibitively high. Research shows that in certain technology elds this can cause a kind of gridlock with innovation delayed or even prevented.16 Michael Heller, an American law professor, coined the phrase “tragedy of the anticommons” to describe this situation,17 which he says has resulted in signi cant blockages in areas such as medical research.18
1.16 In the copyright area transaction costs can create similar problems. Digital technologies have brought large reductions in the cost of copying, storage and distribution for words, music, images
and all forms of data. This has the effect of making transaction costs around rights a much more signi cant element in the business equation and so, potentially, a likelier barrier to licensing and follow on innovation.
The Transforming Effects of Digital Technology
1.17 Digital technology is probably the most important and transformative technology of our time. Because digital is fundamentally an information and communication technology (ICT), intellectual property rights lie at its heart. Not only has ICT adoption and use been among the strongest drivers
of growth,19 but it has pushed content and communication technology into new uses, meaning the IP system has become part of people’s daily lives.20 This has transformed us all into regular, if not daily, copyright creators and allows rms to capture information on customers and transactions in ways that help them experiment in real time with business models and marketing approaches.21 Digital also gives rms the opportunity to market themselves locally, nationally and internationally at relatively low cost, reaching previously inaccessible customers. These are already unprecedentedly global markets, even though the internet has yet to be used directly by two thirds of the world’s population.22
are very apparent in, for example, the biotechnology and software sectors. Hence the relationship between SMEs and larger rms can be symbiotic: they provide each other with direct support for innovative thinking and work together on R&D. Larger rms then provide routes to new and emerging markets for smaller rms.
1.14 Another shift in the innovation ecosystem is the increasing internationalisation of research – in 2007 the top 50 European corporate R&D spenders spent $51 billion of their $117 billion total R&D spend overseas.15 This shift in the landscape changes the pattern of how rms have to manage their still largely nation-speci c IPRs and indicate the importance of policy makers taking an international approach to IP systems.
The Increasing Impacts of Transaction Costs
1.15 IP transaction costs have risen as rights users navigate an ever more densely populated landscape of increasingly subdivided rights. This presents a risk analogous to the problem
familiar in the world of planning, where small ownership interests can block value generating large developments. In the patent world, a surfeit of property rights can mean that the transaction cost of acquiring permission to innovate or create new work is prohibitively high. Research shows that in certain technology elds this can cause a kind of gridlock with innovation delayed or even prevented.16 Michael Heller, an American law professor, coined the phrase “tragedy of the anticommons” to describe this situation,17 which he says has resulted in signi cant blockages in areas such as medical research.18
1.16 In the copyright area transaction costs can create similar problems. Digital technologies have brought large reductions in the cost of copying, storage and distribution for words, music, images
and all forms of data. This has the effect of making transaction costs around rights a much more signi cant element in the business equation and so, potentially, a likelier barrier to licensing and follow on innovation.
The Transforming Effects of Digital Technology
1.17 Digital technology is probably the most important and transformative technology of our time. Because digital is fundamentally an information and communication technology (ICT), intellectual property rights lie at its heart. Not only has ICT adoption and use been among the strongest drivers
of growth,19 but it has pushed content and communication technology into new uses, meaning the IP system has become part of people’s daily lives.20 This has transformed us all into regular, if not daily, copyright creators and allows rms to capture information on customers and transactions in ways that help them experiment in real time with business models and marketing approaches.21 Digital also gives rms the opportunity to market themselves locally, nationally and internationally at relatively low cost, reaching previously inaccessible customers. These are already unprecedentedly global markets, even though the internet has yet to be used directly by two thirds of the world’s population.22
Review of Intellectual Property and Growth 13
1.18 Because copyright governs the right to own and use data and information, as well as the output of authors, musicians, photographers and lm makers, copyright law is now of primary interest to players across the whole of the knowledge economy, not just those involved in the creative industries. Digital technologies are based on copying, so copyright becomes their regulator: a role it was never designed to perform.
Services and the New Innovation Process
1.19 The services which provide most jobs in advanced economies are being changed in other ways by digital technology. Innovations in the insurance industry, for example, rely upon improved data from medicine, demographics and pro ling of individual customer lifestyles. Risk calculations applied to premiums for farmers and event organisers rely upon improved data analysis of weather patterns. Sophisticated assessment of safer cars and better roads can be factored into motor insurance judgments. Understanding these connections and computing the related business risks requires knowledge of what happens at boundaries between systems and the ability to analyse large quantities of data from what, until recently, were separate industries and sectors.
1.20 Collaborative and more “open” distributed innovation processes are especially important because services are not produced in the laboratories and factories of the industrial R&D arena where they can be tested and optimised. Services are usually produced at the point at which they are consumed: the act of consumption rather than invention is the focal point for innovation.
1.21 New services are therefore developed using a “market facing” approach, often connected
to information databases generated by people and organisations that articulate and express their requirements and demands as they experience the innovation. This is sometimes described as a more democratic approach to innovation, where companies trial different approaches – such as beta versions of web pages – and respond to user feedback. It also, however, frequently relies upon the ability to analyse large and complex volumes of data copied between machines, potentially raising multiple copyright issues.
1.22 The nature of services innovation implies that answers to technical problems will not lie exclusively within research institutions or companies with proprietary R&D cultures and the means to manage and protect IP. Instead, they will emerge through integration of ideas from a wide range of organisations, some of whom may consider managing IPR to be an unacceptable obstacle in a high value business, raising further challenges to traditional concepts of ownership of IP.
The Next Wave – Cloud Computing and the Internet of Things
1.23 The next wave of digital technologies and services is likely to create opportunities and disruptions in a very broad range of industries. The internet of things – billions of devices and components with an internet address, enabling them to communicate in massive sensing systems – coupled with cloud computing, will underpin more sophisticated applications, and thereby a host of new services: digital wallets will replace cheques and credit cards; personalised electronic adverts will compete with static hoardings; transport, electricity, power and water systems will provide a continuous
Services and the New Innovation Process
1.19 The services which provide most jobs in advanced economies are being changed in other ways by digital technology. Innovations in the insurance industry, for example, rely upon improved data from medicine, demographics and pro ling of individual customer lifestyles. Risk calculations applied to premiums for farmers and event organisers rely upon improved data analysis of weather patterns. Sophisticated assessment of safer cars and better roads can be factored into motor insurance judgments. Understanding these connections and computing the related business risks requires knowledge of what happens at boundaries between systems and the ability to analyse large quantities of data from what, until recently, were separate industries and sectors.
1.20 Collaborative and more “open” distributed innovation processes are especially important because services are not produced in the laboratories and factories of the industrial R&D arena where they can be tested and optimised. Services are usually produced at the point at which they are consumed: the act of consumption rather than invention is the focal point for innovation.
1.21 New services are therefore developed using a “market facing” approach, often connected
to information databases generated by people and organisations that articulate and express their requirements and demands as they experience the innovation. This is sometimes described as a more democratic approach to innovation, where companies trial different approaches – such as beta versions of web pages – and respond to user feedback. It also, however, frequently relies upon the ability to analyse large and complex volumes of data copied between machines, potentially raising multiple copyright issues.
1.22 The nature of services innovation implies that answers to technical problems will not lie exclusively within research institutions or companies with proprietary R&D cultures and the means to manage and protect IP. Instead, they will emerge through integration of ideas from a wide range of organisations, some of whom may consider managing IPR to be an unacceptable obstacle in a high value business, raising further challenges to traditional concepts of ownership of IP.
The Next Wave – Cloud Computing and the Internet of Things
1.23 The next wave of digital technologies and services is likely to create opportunities and disruptions in a very broad range of industries. The internet of things – billions of devices and components with an internet address, enabling them to communicate in massive sensing systems – coupled with cloud computing, will underpin more sophisticated applications, and thereby a host of new services: digital wallets will replace cheques and credit cards; personalised electronic adverts will compete with static hoardings; transport, electricity, power and water systems will provide a continuous
Review of Intellectual Property and Growth 14
real time update of their performance and user status. Firms will offer us advice and services built on analysis of this kind of data – assuming IP law allows them to copy and manipulate it.
1.24 The convergence of technologies is likely to increase the range of context aware, location based services available to and about citizens. In some cases digital content may be transferred
from one system to another automatically as people or businesses interact using digital devices. Improvements in machine to machine learning, for example, may create the possibility for further automation in transfer of content. Interactions may therefore become implicitly as well as explicitly monitored and measured. This data will form new and valuable content to be traded within and between systems in the delivery of new services. Data on context and activities transferred to adjacent systems may be repurposed and traded, giving rise to a range of issues relating to copyright.
1.25 These issues are already visible – as the Review goes to press, concerns are being raised by the discovery that the Apple iPhone tracks and stores its location continuously, giving a complete picture of its user’s movements for later retrieval, with legal justi cation in a short paragraph in a long “terms of use” agreement.23 Questions of IP, privacy, and security are converging in ways that will, over time, present sharp challenges to the current legal framework.
The Work of the Review
1.26 The full shape and impact of this coming revolution in innovation models is, by de nition, unknowable.
1.27 The point is that the UK’s system of IP will be tested by some version of these scenarios and it will need to be ready to adapt. The challenge is to make sure that the IP framework is exible enough to facilitate, rather than obstruct, the capacity for digital technology to deliver growth. This needs to
be accomplished in a way that simultaneously protects, as far as possible, the position of existing communities of rights holders, notably the extraordinary diversity of individuals and rms which make up the UK’s highly successful creative industries.
1.28 Digital technology has already generated enormous turbulence among creative businesses. That is certain to continue, until digital business models establish themselves around a new settlement for the terms and conditions on which digital goods and services are priced in global digital markets. As digital’s full impact extends across the rest of the economy, it is impossible to imagine that the line between IP protection which merits public support and that which does not will remain static.
1.29 The Review has set itself the challenge of identifying 10 recommendations to ensure that
UK policy on IP moves in a direction which will enable the necessary adaptation to take place. The explicit goal of all the recommendations in this review is to support dynamic UK businesses, within and beyond the creative sector, which will deliver innovation, growth and jobs in the years to come.
1.24 The convergence of technologies is likely to increase the range of context aware, location based services available to and about citizens. In some cases digital content may be transferred
from one system to another automatically as people or businesses interact using digital devices. Improvements in machine to machine learning, for example, may create the possibility for further automation in transfer of content. Interactions may therefore become implicitly as well as explicitly monitored and measured. This data will form new and valuable content to be traded within and between systems in the delivery of new services. Data on context and activities transferred to adjacent systems may be repurposed and traded, giving rise to a range of issues relating to copyright.
1.25 These issues are already visible – as the Review goes to press, concerns are being raised by the discovery that the Apple iPhone tracks and stores its location continuously, giving a complete picture of its user’s movements for later retrieval, with legal justi cation in a short paragraph in a long “terms of use” agreement.23 Questions of IP, privacy, and security are converging in ways that will, over time, present sharp challenges to the current legal framework.
The Work of the Review
1.26 The full shape and impact of this coming revolution in innovation models is, by de nition, unknowable.
1.27 The point is that the UK’s system of IP will be tested by some version of these scenarios and it will need to be ready to adapt. The challenge is to make sure that the IP framework is exible enough to facilitate, rather than obstruct, the capacity for digital technology to deliver growth. This needs to
be accomplished in a way that simultaneously protects, as far as possible, the position of existing communities of rights holders, notably the extraordinary diversity of individuals and rms which make up the UK’s highly successful creative industries.
1.28 Digital technology has already generated enormous turbulence among creative businesses. That is certain to continue, until digital business models establish themselves around a new settlement for the terms and conditions on which digital goods and services are priced in global digital markets. As digital’s full impact extends across the rest of the economy, it is impossible to imagine that the line between IP protection which merits public support and that which does not will remain static.
1.29 The Review has set itself the challenge of identifying 10 recommendations to ensure that
UK policy on IP moves in a direction which will enable the necessary adaptation to take place. The explicit goal of all the recommendations in this review is to support dynamic UK businesses, within and beyond the creative sector, which will deliver innovation, growth and jobs in the years to come.
Review of Intellectual Property and Growth 24
3.24 The UK recently13 announced that it would be appointing IP attachés in a number of countries including China and India, re ecting the importance to the UK of sound IP frameworks in these countries, as well as in assisting IP intensive UK rms to exploit new markets. Deployment of evidence-based positions in global negotiations can move parties further from entrenched positions, towards an overriding objective of developing a mutually bene cial world trade in intangibles. This represents a high strategic priority for the United Kingdom.
The Patent Cooperation Treaty
3.25 One area where the international patent system is not functioning well enough is the operation of the Patent Cooperation Treaty system. This system, administered by WIPO, provides a single point of entry to the patent systems of 142 contracting states via a single application. Applications are sent to one of a number of patent of ces which have been designated as “International Search Authorities” for a search to determine if the invention claimed is novel or inventive. The results of the search
are then sent, along with the application, to the individual of ce of the country the applicant wants
protection in, for grant or refusal.
3.26 In theory, this system offers a highly ef cient way of processing patent applications; in particular, by providing a way of only requiring one search worldwide. Unfortunately, as documented by WIPO,14 national of ces have proved reluctant to commit themselves to relying on the international searches, on the grounds that they doubt the quality of the examinations meets their own standards.
The Patent Cooperation Treaty
3.25 One area where the international patent system is not functioning well enough is the operation of the Patent Cooperation Treaty system. This system, administered by WIPO, provides a single point of entry to the patent systems of 142 contracting states via a single application. Applications are sent to one of a number of patent of ces which have been designated as “International Search Authorities” for a search to determine if the invention claimed is novel or inventive. The results of the search
are then sent, along with the application, to the individual of ce of the country the applicant wants
protection in, for grant or refusal.
3.26 In theory, this system offers a highly ef cient way of processing patent applications; in particular, by providing a way of only requiring one search worldwide. Unfortunately, as documented by WIPO,14 national of ces have proved reluctant to commit themselves to relying on the international searches, on the grounds that they doubt the quality of the examinations meets their own standards.
Review of Intellectual Property and Growth 14
real time update of their performance and user status. Firms will offer us advice and services built on analysis of this kind of data – assuming IP law allows them to copy and manipulate it.
1.24 The convergence of technologies is likely to increase the range of context aware, location based services available to and about citizens. In some cases digital content may be transferred
from one system to another automatically as people or businesses interact using digital devices. Improvements in machine to machine learning, for example, may create the possibility for further automation in transfer of content. Interactions may therefore become implicitly as well as explicitly monitored and measured. This data will form new and valuable content to be traded within and between systems in the delivery of new services. Data on context and activities transferred to adjacent systems may be repurposed and traded, giving rise to a range of issues relating to copyright.
1.25 These issues are already visible – as the Review goes to press, concerns are being raised by the discovery that the Apple iPhone tracks and stores its location continuously, giving a complete picture of its user’s movements for later retrieval, with legal justi cation in a short paragraph in a long “terms of use” agreement.23 Questions of IP, privacy, and security are converging in ways that will, over time, present sharp challenges to the current legal framework.
The Work of the Review
1.26 The full shape and impact of this coming revolution in innovation models is, by de nition, unknowable.
1.27 The point is that the UK’s system of IP will be tested by some version of these scenarios and it will need to be ready to adapt. The challenge is to make sure that the IP framework is exible enough to facilitate, rather than obstruct, the capacity for digital technology to deliver growth. This needs to
be accomplished in a way that simultaneously protects, as far as possible, the position of existing communities of rights holders, notably the extraordinary diversity of individuals and rms which make up the UK’s highly successful creative industries.
1.28 Digital technology has already generated enormous turbulence among creative businesses. That is certain to continue, until digital business models establish themselves around a new settlement for the terms and conditions on which digital goods and services are priced in global digital markets. As digital’s full impact extends across the rest of the economy, it is impossible to imagine that the line between IP protection which merits public support and that which does not will remain static.
1.29 The Review has set itself the challenge of identifying 10 recommendations to ensure that
UK policy on IP moves in a direction which will enable the necessary adaptation to take place. The explicit goal of all the recommendations in this review is to support dynamic UK businesses, within and beyond the creative sector, which will deliver innovation, growth and jobs in the years to come.
1.24 The convergence of technologies is likely to increase the range of context aware, location based services available to and about citizens. In some cases digital content may be transferred
from one system to another automatically as people or businesses interact using digital devices. Improvements in machine to machine learning, for example, may create the possibility for further automation in transfer of content. Interactions may therefore become implicitly as well as explicitly monitored and measured. This data will form new and valuable content to be traded within and between systems in the delivery of new services. Data on context and activities transferred to adjacent systems may be repurposed and traded, giving rise to a range of issues relating to copyright.
1.25 These issues are already visible – as the Review goes to press, concerns are being raised by the discovery that the Apple iPhone tracks and stores its location continuously, giving a complete picture of its user’s movements for later retrieval, with legal justi cation in a short paragraph in a long “terms of use” agreement.23 Questions of IP, privacy, and security are converging in ways that will, over time, present sharp challenges to the current legal framework.
The Work of the Review
1.26 The full shape and impact of this coming revolution in innovation models is, by de nition, unknowable.
1.27 The point is that the UK’s system of IP will be tested by some version of these scenarios and it will need to be ready to adapt. The challenge is to make sure that the IP framework is exible enough to facilitate, rather than obstruct, the capacity for digital technology to deliver growth. This needs to
be accomplished in a way that simultaneously protects, as far as possible, the position of existing communities of rights holders, notably the extraordinary diversity of individuals and rms which make up the UK’s highly successful creative industries.
1.28 Digital technology has already generated enormous turbulence among creative businesses. That is certain to continue, until digital business models establish themselves around a new settlement for the terms and conditions on which digital goods and services are priced in global digital markets. As digital’s full impact extends across the rest of the economy, it is impossible to imagine that the line between IP protection which merits public support and that which does not will remain static.
1.29 The Review has set itself the challenge of identifying 10 recommendations to ensure that
UK policy on IP moves in a direction which will enable the necessary adaptation to take place. The explicit goal of all the recommendations in this review is to support dynamic UK businesses, within and beyond the creative sector, which will deliver innovation, growth and jobs in the years to come.
Review of Intellectual Property and Growth 24
3.24 The UK recently13 announced that it would be appointing IP attachés in a number of
countries including China and India, re ecting the importance to the UK of sound IP frameworks in
these countries, as well as in assisting IP intensive UK rms to exploit new markets. Deployment of
evidence-based positions in global negotiations can move parties further from entrenched positions,
towards an overriding objective of developing a mutually bene cial world trade in intangibles. This
represents a high strategic priority for the United Kingdom.
The Patent Cooperation Treaty
3.25 One area where the international patent system is not functioning well enough is the operation of the Patent Cooperation Treaty system. This system, administered by WIPO, provides a single point of entry to the patent systems of 142 contracting states via a single application. Applications are sent to one of a number of patent of ces which have been designated as “International Search Authorities” for a search to determine if the invention claimed is novel or inventive. The results of the search
are then sent, along with the application, to the individual of ce of the country the applicant wants
protection in, for grant or refusal.
3.26 In theory, this system offers a highly ef cient way of processing patent applications; in particular, by providing a way of only requiring one search worldwide. Unfortunately, as documented by WIPO,14 national of ces have proved reluctant to commit themselves to relying on the international searches, on the grounds that they doubt the quality of the examinations meets their own standards.
3.27 Given the strain on patent of ces from increasing numbers of patent applications internationally, considered in more detail in Chapter 6, this is a problem urgently in need of a solution. The UK should therefore make it a priority to support the work of WIPO to improve trust in a system of international search. This would be in addition to the other work sharing initiatives among patent of ces considered in Chapter 6.
Conclusion
3.28 The challenges from changing technology and patterns of innovation extend well beyond the UK. By adopting the evidence-based approach advocated by the Review, the UK has the chance to help shape global responses to these challenges, and so position itself to take best advantage of the opportunities they offer internationally.
The Patent Cooperation Treaty
3.25 One area where the international patent system is not functioning well enough is the operation of the Patent Cooperation Treaty system. This system, administered by WIPO, provides a single point of entry to the patent systems of 142 contracting states via a single application. Applications are sent to one of a number of patent of ces which have been designated as “International Search Authorities” for a search to determine if the invention claimed is novel or inventive. The results of the search
are then sent, along with the application, to the individual of ce of the country the applicant wants
protection in, for grant or refusal.
3.26 In theory, this system offers a highly ef cient way of processing patent applications; in particular, by providing a way of only requiring one search worldwide. Unfortunately, as documented by WIPO,14 national of ces have proved reluctant to commit themselves to relying on the international searches, on the grounds that they doubt the quality of the examinations meets their own standards.
3.27 Given the strain on patent of ces from increasing numbers of patent applications internationally, considered in more detail in Chapter 6, this is a problem urgently in need of a solution. The UK should therefore make it a priority to support the work of WIPO to improve trust in a system of international search. This would be in addition to the other work sharing initiatives among patent of ces considered in Chapter 6.
Conclusion
3.28 The challenges from changing technology and patterns of innovation extend well beyond the UK. By adopting the evidence-based approach advocated by the Review, the UK has the chance to help shape global responses to these challenges, and so position itself to take best advantage of the opportunities they offer internationally.
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