The Hargreaves Review - Does It Support Growth and Innovation in the South West in the 21st Century?Wednesday 18th May 2011
Last November, the Prime Minister announced an independent review into whether the UK's existing intellectual property ("IP") framework supports economic growth and innovation. The idea was to identify barriers within the existing framework of laws and policies and to put forward proposals as to how they might be overcome.
The independent review was to be chaired by Professor Ian Hargreaves, an academic based at the Cardiff School of Journalism, Media and Cultural Studies and Cardiff Business School. In addition, he was to be supported by a panel of experts.
Shortly after the announcement of the review, a call for evidence was issued, which led to submissions being made by such distinguished bodies as the BBC, the CBI, The Association of the British Pharmaceutical Industry, The British Copyright Council, The Motion Picture Association and The Performing Rights Society for Music. Private companies that made submissions included AstraZeneca, eBay, EMI, Getty Images, Google, IBM, and Microsoft.
The importance of the Review should not be underestimated. Whereas in years gone by companies mostly valued their worth through a combination of ownership of tangible assets (such as stock, plant and machinery) and profit margins, these days a significant proportion of the value of many companies is determined by their ownership and control of intangible assets, such as IP rights. Imagine how the stock market would react if Google, Intel or Coca-Cola were no longer able to prevent others from using their famous brand names, or if AstraZeneca could not prevent others from making drugs that infringed their patents?
But it is not just the multinational Plc's who require our IP laws and polices to be fit for purpose. If we are to stimulate business innovation and growth in the South West, we need to make sure they work also for the SME market, so that they encourage and assist local inventors, entrepreneurs and early-stage investors in IP rich businesses.
Today saw the publication of the Hargreaves Review. Having considered the Review in outline, it is this author's opinion that many of its proposals are to be welcomed and the Government should be encouraged to implement them, sooner rather than later. In particular, it identifies certain proposals that will assist the growth of SMEs in the South West. These include creating the world's first cross sectoral 'one stop shop' digital copyright exchange, where rights owners from a variety of different industries, such as music, film and publishing, can sell and others can buy standard form licences to use their copyright works.
The Review also encourages the Government to work with other EU countries to remove barriers to cross border licensing of copyright works. This is in recognition of the fact that many modern businesses, especially those trading online, need easier ways to obtain licences to use copyright works across several jurisdictions. In addition, the proposal to introduce cheaper Court procedures in this country, for the enforcement of IP rights, will be welcomed by smaller businesses that rely on IP rights to give them a cutting edge in the marketplace, especially against bigger and richer rival corporations.
However, despite these very helpful proposals, it is this author's opinion that more could still be done to assist the growth of the SME market. In particular, two omissions in the Review stand out. First, it is this author's opinion that one of the biggest obstacles to economic growth and innovation is the cost to a small, early stage business of obtaining registered IP rights, especially patents. The Government needs to think long and hard about making it cheaper for smaller businesses to obtain these rights. What about reduced official registration and prosecution fees for businesses with small turnovers? Or more generous tax breaks and grants to SME businesses which look to obtain these rights, both in the UK and overseas?
Secondly, we need the Government to encourage and make it easier for more third party investment in early stage IP rich businesses. Banks and venture capitalists are often unwilling to invest in start ups and other early stage businesses on terms that are financially viable and commercially acceptable to their owners - yet these are the very businesses that need funding to get their ideas off the ground. Put bluntly, structures need to be put in place to make it easier for these businesses to get access to the finance they need to fund their growth.
If banks won't provide the finance, what about encouraging ordinary, everyday local folk to each invest a few hundred pounds of their own hard earned money in small, third party owned, local businesses which create local jobs? This could be done by a combination of tax breaks for investors and by co-ordinating the setting up of local and regional stock exchanges, so that it becomes easy to buy and sell shares in small, local businesses. Isn't this what Mr Cameron meant by the 'Big Society', namely local people coming together to solve local issues? Furthermore, it is all very well the Government saying that we all need to be more 'entrepreneurial' in our outlook, but steps need to be taken to educate and encourage ordinary, local people to think and behave in this way. Words are easy, but good cold cash often helps to persuade people to change their views.
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