Baroness Delyth Morgan - World Intellectual Property Day keynote speech
Imagination Gallery, London - 25 April 2008

As the Minister for Intellectual Property, I am delighted to have the opportunity to share my thoughts with you to mark World Intellectual Property Day.

Intellectual Property presents a paradox. It is threaded through much of the day-to-day business of living in Britain in the 21st century: to read, or listen to music, or make a purchase, or create or sell something new is to involve oneself with IP. It is central to the business models of many of our companies.

The paradox is that nevertheless it continues too often to be seen as the preserve of technical specialists.

What IP is about is knowledge, ideas, inventions and reputations which have, or have the potential to have, value. IP, and our ability successfully to realize its value, is central to our prosperity and our quality of life.

IP is central to our ability to compete on high value-added products and services in the modern global economy. It will be vital too to our ability, together with other nations, to meet challenges in health, security and of course climate change.

It is equally important to us as consumers and citizens. As consumers we need to have the opportunity and freedom to gain access to the goods and services we need. In today's information society the availability of, and access to, emerging knowledge and ideas is critical to developing and obtaining those new goods and services.

In other words, it matters that those of us who are policy-makers get the IP environment right. And that means meeting several fundamental challenges.

You won't be surprised to hear me mention globalization, or technology, or the growing importance of behaviours such as user-led innovation and open innovation which depend on the flow of knowledge, that is to say IP, across organizational boundaries.

You may not be expecting me to say that actually the overarching challenge is to ensure that the IP system should be fair, and generally felt to be fair. I say this because we will not succeed unless we can fashion an IP environment which is fair, and felt to be fair, and accessible to all who can benefit from it.

As in other fields of economic policy we emphasize fairness both in the interests of justice, and because it is a prerequisite for success in practice.

Last month, the Department for Innovation Universities and Skills White Paper - Innovation Nation - set a new agenda for innovation. An agenda for Britain as an innovative society. Among other things it marks a sea-change in the Government's approach to the Intellectual Property system.

Historically the focus has been on providing an enabling framework of statutory rights, and the means for obtaining and disputing these rights. A good deal less attention has been paid to how well business has understood this framework, how far and how successfully business has used it, or how well it has utilized other means such as confidentiality agreements to secure value from know-how. How far the IP framework is accessible and working, is in the interests of all.

You will not, I think, now be surprised that I believe that the time has passed when Government could afford to take this relatively relaxed attitude to how far the potential of IP in the economy is actually being realized. In today's economy it is an inadequate approach, too indifferent to the ultimate effectiveness and fairness of the IP system.

What does fairness mean in the IP field? IP Rights are powerful monopolies conferred by the State. Quite rightly, we often think in terms of a balance between the extent of the monopoly enjoyed by rights-holders, and the interests of consumers in choice.

Of course this is an important dimension to fairness in IP. But I am thinking of fairness in more far-reaching sense than that. A system which affects all, but is in important senses inaccessible to many, cannot be said to be fully fair. I stress that in the UK I think we get quite a lot of things right in this respect: the Gowers review of IP published in December 2006 found that the framework is 'broadly fit for purpose'.

But we also still have some distance to travel. IP is too inaccessible to the ordinary people who are affected by it. It is too much characterized by technical language and policy debates which happen as arguments between experts or zealots.

At this point I expect some of you are thinking 'well that's because it is technical.' So let me clarify: I recognize, indeed I celebrate, the contribution which IP specialists make. What I do not think we have yet got right, is the relationship between the experts and the wider public, to enable the wider public to make best use of the system that affects us all.

I do not believe we can realize our national innovation potential while large numbers of businesses are ignorant of the options the IP framework provides for turning their IP into value.

There is strong evidence that most UK businesses do not assign responsibility for managing their IP, and many are unaware of the basic requirements of trade marks, patents, and so on. This is why Innovation Nation contains commitments to equip every Government adviser to business in Business Links and UK Trade and Investment to give advice on IP management.

That leads me to a second, equally serious weakness. We should not be surprised that a system which is inaccessible and poorly understood is not felt to be fair, and consequently does not command universal respect. I am not convinced that we have yet achieved a situation where the framework of rules is widely regarded as embodying an agreed settlement. As a result we have some way to go to achieve general compliance with IP law.

One consequence is unfairness to creators. IP crime is not victimless. Estimates are that a 10% reduction in software piracy would create 30,000 jobs and save the UK economy £11 billion. In recognition of this, we have developed a National IP Crime strategy and made changes to IP laws. We have given greater powers to Trading Standards Officers and backed this with 8 million pounds of funding.

In the international arena the extent of loss through IP crimes is enormous. Global sales of counterfeit drugs are estimated to reach about 37 billion pounds by 2010. According to OECD estimates, the total annual global value of trade in fake goods exceeds 200 billion dollars, which is greater than the GDP of more than 150 countries.

The importance of brand, captured by trade marks, has been increased by the Internet. Today the vast majority of the value of consumer-based companies often resides in their brands. For example, the value of HSBC's and Burberry's brands are estimated to stand at over 6 thousand million pounds and 1600 million pounds respectively. Branding is providing UK companies with the opportunity to exploit their reputation and gain a competitive edge in global markets.

The creative industries, whose business models depend critically on the copyright framework, supply between seven and eight percent of GDP and rising. This year marks the three hundredth anniversary of the first Copyright Act. The copyright framework has served us well, but today huge technological changes have not only radically altered consumer behaviour but are also raising fundamental questions - for creators, for rights-holders, for businesses, users and consumers, and for the legal framework itself.

A central task for me and the UK Intellectual Property Office, as the Government body responsible for the IP system, will be to get the copyright framework right. It needs to offer appropriate protection and incentives to creators and businesses, without unduly restricting users or prejudging technological development.

We have made a start, through our recent copyright consultation on issues such as format shifting, exemptions for research and private study and distance learning. Balancing the interests of creators and consumers will underpin this, and indeed all of our work on shaping the IP system.

This is where fairness of process, which sounds dull, is vital. If we are to generate the respect for copyright law which is a prerequisite for general compliance then the process must not appear to be a conversation confined to experts or those with vested interests to advance.

Of course, how to take public policy decisions in a complex field which affects everybody is not a question peculiar to IP. It seems to me that one of the lessons which public attitudes to science teaches is that the public do not expect to understand all about the science, but they do - quite rightly in my view - want to know that the experts are working from a respected base of independent evidence.

In IP we have work to do to make that true.

The surprising reality is that a systematic understanding of how IP is used in the economy is not yet available. Although there is a good deal of economic literature on IP, it does not answer the important questions we need to understand.

We do not know enough about how and why firms do and do not use IP. And we do not know enough about precisely how IP rights deliver value. We have yet to understand fully the impact attitudes to IP have on innovative behaviours.

The UK Intellectual Property Office is establishing a research programme to develop the economic evidence base on intellectual property and innovation to underpin IP policy.

As well as this, we have recently appointed Joly Dixon to head the new Strategic Advisory Board on IP. SABIP's role will be to provide direction to a substantial programme of research, for which it will have an annual budget of £500,000.

I very much look forward to seeing these activities develop, and I expect them to shape the further development of our policy to ensure the best use of IP in the economy. I expect one of the consequences to be a body of work that can be used as a resource by all those with an interest in IP.

I also expect them to deepen our understanding of how we can best support the easy flow of IP within the economy. Innovators increasingly draw on knowledge from sources outside their own innovations, including universities, other companies, and their own customers.

The extent to which the cultural and operational framework as well as the legal system facilitates these transactions then becomes an important question.

Government can make a difference here. It is clear that the cost and complexity of IP transactions presents a problem for some businesses. Although we have made progress in reducing the costs of applying for registered rights, professional advice constitutes most of the cost of IP transactions.

We have set up a group of external stakeholders to produce a range of business-to-business licensing resources. The principle is to reduce the cost and complexity of transactions by avoiding the need for reinvention of the wheel each time.

In the same vein we want to be sure that companies are not being inhibited in securing finance, by the way in which intangible assets such as IP are reported. We are examining whether better reporting can make a difference, and will be reporting our conclusions in the autumn Innovation Report.

Responsibility for innovation and universities in the same Government Department will help us ensure that we secure full value from IP created in publicly-funded research. The Secretary of State and I are pursuing work with Professor Paul Wellings of the University of Lancaster to look at further optimising the commercialisation of IP from the publicly-funded research base.

Lord Sainsbury's recent review concluded that the old adage, that the UK is excellent at science but poor at commercialisation, no longer holds true. Richard Lambert's 2003 review has done much to support this upturn and we continue to support his IP work that is developing resources for multi-partner research consortia.

A few minutes ago I mentioned the challenge that globalization presents. For industries dependent on scientific research and technology, the protection offered by patents is crucial to many business models. For example, much of the pharmaceutical industry's 7.5 billion pound, gross valued added, will be underpinned by patents.

But of course most of those who need to use the patent system are not big corporations. For them it is especially important that we respond to globalization by reducing the cost and complexity of patenting internationally.

We look to our inventive companies in Europe to respond to the challenges of competition from North America and the emerging companies of China and India and elsewhere. They should not have the disadvantage of an unnecessarily costly and complicated patent system in their home European market.

Some progress is being made: the London Agreement which comes into force next Thursday will significantly reduce the translation cost of European patents. We are giving priority to supporting efforts to increase the efficiency of the European Patent Office, and also to improve governance and performance at the World Intellectual Property Organization.

In this international context fairness also means fairness to developing countries. We believe that IPR regimes can and should be tailored to take into account individual country's specific circumstances. And we are committed to ensuring that developing countries are able to create an IP system appropriate to their needs.

Closing

I realize I have covered a lot of ground. I will try briefly to draw the threads together. What is my vision for the future IP environment?

I want an IP environment where:

• The national and international IP system is fair to innovators, by offering them an accessible means of capturing value from their creativity;
• The basic IP framework is understood not only by specialists and larger firms in particular sectors, but also by society at large - by people citizens and consumers in the information society;
• National and international IP institutions are efficient and fair to their users and to those affected by their decisions.

We will have succeeded when IP and the language of IP no longer belong to the experts.

When the IP environment is working for all. When it is unlocking the talent of all our creators and innovators.

Thank you for coming today. I would be pleased to take questions before we have lunch, and I hope I can speak with many of you as we eat. If I don't manage to speak to you personally, please do speak to my colleagues here or write or e-mail me. It is very important to me that I know what you think about how best to deliver value from your IP.