Wednesday, 21 August 2013

The importance of intellectual property

The UK's Intellectual Property Office is on our doorstep in Newport.
Have Welsh universities and businesses been making enough of their own
intellectual property? Is it holding back the Welsh economy?
(Pic : South Wales Argus)
When I first started surfing the Welsh political blogopshere, I noticed this topic popping up a disproportionate number of times in comments sections.

I noticed it cropping up again elsewhere, so I've decided to address it myself, underlining that it perhaps isn't an eccentric obsession it appears to be, but worthy of close attention by politicians if they're interested in the long-term future of the Welsh economy.

What is intellectual property (IP)?

Broadly speaking, it's a legal claim of ownership over rights relating to an item of work that's been created. IP takes several forms :
  • Patents – Legally protects an invention, its design and functions. Patent owners can take legal steps to prevent anyone else copying what's outlined in the patent itself. It applies mainly to things with industrial uses.
  • Trade marks – A legally-protected "sign/brand" for a company or product, assuring consumers that the product is what it says it is and from who it says it's from. Uses the symbols :™ and ®
  • Registered designs – IP protection for how a product "looks".
  • Copyright – Legal ownership over "original creative works" (books, plays, TV programmes, music etc.). It means they cannot be reproduced without permission from the copyright owner(s), depending on the terms and conditions by which it was produced/published (i.e. The Creative Commons License). Copyright doesn't have to be registered as it's automatic, simply by using the © symbol and a date.

IP in the UK – How it works

Apart from copyrights and trade marks, it's a lengthy, costly (£280 up front, up to £600 for patent renewals) and mind-numbing process. The reason being that it has to be legally watertight.

Patent law is a highly-specialised legal branch, and it's normal to get legal advice before pursuing a patent claim.

Trying to obtain a patent can be a time-consuming
and lengthy process that takes up to 4 years.
(Pic : Coventry University)
For patents and designs, you register with the local patent office. In a twist of irony, the UK's Intellectual Property Office (IPO) - an executive agency of the UK Department of Trade & Industry - has been based in Newport since 1991.

The patent application is very thorough, including : drawings, detailed technical specifications, an abstract (brief summary) of what the new innovation does and any specific rights/claims being made. The job of the patent office is to explore records – national and international – and determine if the innovation is "unique enough" to be patent protected.

Patents only apply in the territory they were protected in – so patents registered with the IPO are only protected within the UK. Separate applications have to be submitted with foreign patent offices to enable worldwide/international protection.

30 European countries signed the European Patent Convention, meaning a single application would cover all signatory nations at the same time. That's handled by the European Patent Office. If the Intellectual Property Bill is passed by Westminster, then a Unified Patent Court for Europe will be based in London, and it'll also mean granted UK patents will apply across the EU.

Patent protection can take up to four years. The legal term "patent pending" applies where an application has been submitted, but the patent is yet to be granted. It warns anyone thinking of copying it that they can be retrospectively sued once a patent is granted.

Why is IP economically important?

I'm focusing mainly on the patent side of things, but IP is equally important to artists for obvious reasons.

If you innovate - create something new or improved – you'll want a reward for your efforts. Protecting IP ensures the creator (i.e. university, company) benefits from their creation, whilst offloading production/sales work to someone else, simply because the creator doesn't have the means to do all that.

Those benefits include:
  • Protection from fraud and counterfeit versions.
  • Controlling where/how a new product is manufactured, including the creation of dedicated spin-out companies.
  • Generating income from licensing new products to other companies.
  • Generating more inward investment as a university/country becomes associated with greater innovation via lots of IP-protection activity.
  • Creating the motivation for further R&D off the back of successful IP protection and licensing.

Why is IP important to Wales?

It's good for a nation's (or university's) image to generate high numbers of patents and copyrights. It sends out the message, "These are smart people. Look at all the new ideas/products their developing. I want to invest there because they're doing good work."

It boosts global university rankings, attracting higher calibre international and domestic students. It also generates more opportunities to pursue higher qualifications like Masters and PhDs, especially if any patented innovation is successful enough to warrant further R&D.

At the moment, levels of IP-protection amongst Welsh universities make grim reading.

Patents published with the European Patent Office from
Welsh universities between August 2008-August 2013
(Click to enlarge)
There are only 87 patents from Welsh universities (or spin-out companies) published on the European patent register between August 2008 and August 2013. Nearly half of them are from Cardiff University and many are quite old.

For want of a comparison, the benchmark Massachusetts Institute of Technology (MIT) has 326 published patents for the same period. Trinity College Dublin has 77, as does Edinburgh University.

Cardiff University isn't doing too badly, remaining competitive with other Russell Group universities like Bristol. Cardiff's going to produce proportionally more IP as they attract the lion's share of research funding through being a research-focused university. They've also successfully commercialised their IP through the Fusion IP company.

Swansea University has joined Fusion IP, and once the Swansea innovation campus is built, we might see Swansea catch up on the engineering side of things.

Having briefly scanned through industrial patents, it look like Welsh companies are doing OK. For example, Bridgend companies had more published patents (45) than Cardiff University (38) over the same period – mostly bioengineering products. You would expect our universities to be doing better though.

What's IP worth to Wales currently?

The latest HEFCW press release (pdf) on the economic contribution of the Welsh university sector shows that Wales punches at its weight overall (at least 4.9% of all UK university activity).

In 2011-12, Welsh universities generated:
  • 7.5% of all UK income from collaborative research.
  • 18.9% of all UK income from regeneration and development programmes.
  • 5.2% of all software licence income (a fall from 10.6% in 2010-11)
  • 6.4% of all active spin-out companies that survived at least 3 years.
  • 21.7% of all non-university owned spin-outs that survived at least 3 years.
That makes pretty good reading, you'll agree. But there were pretty significant and important weaknesses.

Over the same period, Welsh universities attracted/generated just :
  • 2.3% of the UK's cumulative active patents (despite an 89% increase in patent applications on 2010-11).
  • 2.6% of income from intellectual property (despite a 12.7% increase in income on 2010-11).
  • 2.3% of income from contract research.
  • 1.0% of income from facilities and equipment.
Cardiff, and in future, Swansea universities aren't doing
too badly. However, it'll be a long time before Welsh
universities are doing MIT type work - shown above.
(Pic :

Based on the Higher Education Statistics Agency figures, if Wales punched "at its weight", Welsh universities would generate approximately an extra:
  • £1.6million in intellectual property income.
  • £28.9million in contract research.
  • £5.25million in facilities and equipment income.
Scottish and Northern Irish universities do significantly better than Wales on all counts.

The income from IP itself isn't that great, bordering on insignificant. That's not the point though, as IP usually attracts other things like contract and consultancy research, which generate greater incomes and allow universities to remain globally competitive.

On the whole, there's clearly been a failure by Welsh universities and companies to take advantage of IP-protection, possibly meaning :

  • Welsh innovations might be generating benefits somewhere else that should be benefiting us.
  • Wales isn't innovating enough, leaving the Welsh economy stuck in the mud.
  • There's a distinct lack of IP expertise within Welsh business development agencies.
  • Welsh companies and universities don't have the confidence to pursue IP protection, leaving it for larger universities and companies to pursue.
  • Welsh companies and universities are only patent protecting in a single territory (UK/EU) without thinking about global IP-protection.
I'm not exaggerating by suggesting it's a hidden weakness in the Welsh economy, and one clue in a long trail of clues as to why Offa's Gap is so large.

The Political Response

Back in 2008-2009, the Third Assembly's Enterprise & Learning Committee held an inquiry into the Economic Contribution of Higher Education. It generally accepted that there needed to be more specialist IP support, including holding seminars relating to IP at innovation conferences.

More recently, the Welsh Government launched a new Science for Wales strategy, along with the creation of a public-private life sciences fund and Sêr Cymru. However, the Science for Wales strategy only covers IP protection and exploitation briefly (p28), hinting at a forthcoming innovation strategy.

That innovation strategy - Innovation Wales - was launched last month by Business Minister Edwina Hart (Lab, Gower), though again IP is only mentioned in passing. Some outlined measures include : increased patent mentoring, IP being at the heart of things like the Cardiff life sciences hub, and parts of the public sector – like the NHS – taking ownership of their own IP and "maximising the economic and social impacts of their investments".

Clearly some of that's working as patent applications and income from IP have increased, but nowhere near fast enough to punch at our weight.

Problems with IP

To be frank, whatever's being protected could be a load of crap. You could patent a heating unit for milk chocolate teapots, it doesn't mean it's of any use. Patent lawyers will just smile and nod through the process – they're getting paid regardless.

People can get very passionate about their inventions, to the point of losing their senses of reason. Some could even hold a grudge against the Welsh Government, perhaps devolution itself, for not backing them properly. They watch them spend money on "other things", while their invention sits in a drawer, overtaken by others with more investor backing elsewhere in the world.

So, you have have all the cast-iron patents you want and it won't guarantee a commercial success, only a technological one. Sometimes not even that.

Any solutions?

It's people, connections and skills that are required really.

To get new technologies off the ground requires vasts amounts of capital. We need more networking with venture capitalists/investment funds and greater access IP expertise. Most of this could be done through the existing Finance Wales model, or even through more specialised investment funds like S
êr Cymru.

The universities and companies can be left to their own devices – hopefully coming up with new innovations we can take to the rest of the world – whilst being sensible enough to protect what they come up with, ensuring they - and the Welsh economy - benefit.

In the context of independence, there's likely to be little change to the current arrangements. As patent law is being harmonised across the EU, there's little scope for major legislative differences between EU member states, including Wales in the future.

There would be question marks over the future of the IPO in Newport as a major employer in the area, but I see little reason to close it, and it's more cost-effective for it to remain a pan-Great Britain & NI patent office. Even if it did go, there would be a need for a Welsh Patent Office - the Republic of Ireland has its own.

The creation of a centralised, single European Patent Office based somewhere on mainland Europe is probably more of a long-term threat to the IPO than Welsh independence. In fact, there would likely be a solid case for the IPO to evolve to become that pan-European institution.


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