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Friday, 25 February 2011

Pioneers, Pirates and Parvenus – IP v Innovation

Pioneer -- but was he first
a pirate or a parvenu?
The IPKat's friend Gwilym Roberts (Kilburn & Strode) attendedHargreaves meeting earlier this week which, though smartly chaired by Johanna Gibson, was sadly lacking in input from its target SME audience. Participants were exhorted to get their submissions in by the end-of-month deadline and Gwilym was inspired to do so.  This was what he writes:
Pioneers, Pirates and Parvenus – IP v Innovation

Value comes from resources and there are two kinds of resource: physical and intellectual. Mere access to physical resources – raw materials, say – can provide value, and only when location or extraction of a physical resource becomes competitive does innovation cease being marginal. For intellectual resources, however, innovation is the sole creator of value. As the UK only has intellectual resources, therefore, innovation is everything.

With this in mind, and in its never-ending quest to find a British iPod, the UK government has commissioned another report, this one led by Prof Hargreaves, which seems to ask the slightly wrong question “How can IP promote innovation and growth?” The problem of stimulating innovation is of course fundamentally unrelated to the nature of the legal system protecting it, and if this is the goal then the nation must be tasked with creating the necessary culture of creativity, risk taking and adventure. IP is useful but peripheral – innovation leads IP; not the other way around. What is useful is ensuring that the framework IP provides (and I’m focusing on patents) is properly thought through.

At one end of the IP spectrum sparkle the pioneers. These iPod-creating, dual cyclone-reaping entrepreneurs have ideas so world-beating that there is often a clear patent playing field, and a reasonable monopoly is enough to merit the research and investment underpinning their success. The patent system is well designed to provide this, and given the funding to support development and the relatively modest proportion spent on protection, the system has rewarded their creative/ risk-seeking adventurous handsomely and fairly.

At the other end lurk the pirates. The IP system is again very effective, as long as technology can keep up, at stopping plain, sometimes criminal copying. Here again it seems fit for purpose.

Which leaves us in the middle with the legitimate latecomer competitor, the provider of an alternative approach, the parvenu. Unlike the pioneer, they are not moving into uncharted and unclaimed territory, but a region cluttered with patent thickets and landmines. Yet unlike the pirate, they are just trying to carve out a fair slice of the action. An advantage is certainly that the market is established and the rewards are quantifiable – the risk has shifted from a commercial to a legal one. The problem that the latecomer has, therefore, is of uncertainty. If they knew they couldn’t do something, they’d move on, but what they face is a game of percentages, endless waiting and painful legal costs while they establish a rough idea of FTO.

So at the highest level IP v innovation can be boiled down quite neatly. First, innovation leads, and this is a cultural issue beyond Hargreaves’ remit. For those who’ve “got” innovation – the pioneers - it’s then about funds, to develop to market, and to get the good advice, often with little third party IP in the way. For the parvenu it’s about timely clarity and a good understanding of where they can safely compete. And for the pirate – hopefully – it’s about time they gave up.

Wishful thinking, or cruel deception?
The government can help therefore. The system at either end is fine – it’s clear how we can get patents, and it’s relatively easy to stop straight rip-offs. The problem is in the middle. We need an accessible and educated market for raising money to fund innovation – simple and early exposure to potential investors and respected metrics for evaluating the value of intellectual assets can provide the platform for exploitation of a great idea. We also need a faster way of resolving uncertainty about potential infringement, whether through limiting the remedies or improving mechanisms such as declarations of non-infringement. With these in place we’ll be able to exploit our intellectual resources more readily, and with less fear that they’ll turn out to be someone else’s.

Ideally this will lead to upwards mobility in our strange IP class system: pirate becomes parvenu; parvenu becomes pioneer. As for where the pioneer goes, well they’ll do fine whatever the framework, and if the outcome of Hargreaves is a few more of them then it will have been an unmitigated success.
The IPKat hopes to hear from those pioneers, pirates and parvenus who read this weblog: has Gwilym got it right?

12 comments:

Neil Wilkof said...

Jeremy,

Do we know when IP and innovation became rhetorical bedmates? My guess is that it took place at some crisis point, where sources for economic salvation were desperately sought, but I would be delighted to be proven wrong. More generally, does anyone know of any articles that track the pairing of IP rights with social/economic goals, reaching back from the 19th century?

Anonymous said...

This is an acurate definition of the problem, but I would say it is more necessary to rapidly determine the validity of a pending application. Infringement determination is much more straightforward. Speeding up examination, without reducing quality, would be a good start and is also perfectly do-able. Initial opinions are already provided by the EPO with the search and these are very valuable for both applicants and third parties.

The UKIPO needs to increase its search and examination fees considerably in order to generate the resources needed to speed up the examination process. The EPO may need to do likewise, although I'm a little concerned as to where all those fees already paid have gone.

SMEs and sole inventors who want everything for free will bemoan such a suggestion, but even such increased fees should not deter an educated applicant from making appropriate use of the patent system.

Anonymous said...

I agree with Gwilym that we do need an accessible and educated market for supporting innovation. Many potential investors steer clear of supporting innovation and IP because of a lack of understanding.

I sense greater interest and support from previously-uninterested parties (such as banks), especially where relatively small sums re involved. We must, however, avoid the grant dependency culture which was a problem here in Wales for so long. It is the innovation (not the availability of funds) that should drive things forward.

Anonymous said...

The problem of stimulating innovation is of course fundamentally unrelated to the nature of the legal system protecting it

Perhaps I am missing something here but the patent system is very much about disclosure and sufficiency, and thus allowing others to build on the invention which in turn is promoting the arts.

While "The person skilled in the art" is rather artificial and few skilled persons make use of the patent databases I know of a few fields with big players that actively monitor their competitors to see if they can make something better. And they do. In some extreme cases the application for the improvement lifts drawings from the original application wholesale, a clear indication that the patent databases were essential.

Thus I respectfully submit that the nature of the patent system does stimulate innovation. I will also be the first to admit too few make use of this possibility.

IP Chimp said...

See this link: IP v Innovation (which may be coloured by the computing use of "IP", so also see here: Patent v Innovation).

Anonymous said...

The fundamental point is that the Hargreaves review is just pointless. Its terms of references state: “The Review will develop proposals on how the UK's intellectual property framework can further promote entrepreneurialism, economic growth and social and commercial innovation.” The IP system cannot “promote” any of these so any proposals are from the outset going to be ineffective. . The review is also asking the wrong questions about non-problems. I don’t know any entrepreneurs that are gagging to get going but are hindered by the UK or global P system...that’s not the problem. The shocking thing really is that our political classes actually believe that tinkering with the IP system will make a difference. Reviews are cheap and produce useful sound bites for the politicians who need to be seen to be doing something that looks positive.

The sad fact is that we have very few pioneers....Dyson almost stands alone..... We also have painfully few Parvenus and we are too expensive to be a nation of pirates.

What is the point of IP and an IP system when there are no innovators, no entrepreneurs and no innovation? It’s not the failings of the UK IP system that has lead to this sorry state of affairs in the UK. Yet a another IP review will have exactly the same impact on this UK problem as all previous reviews....a big fat zero.

Anonymous said...

The comment on the reliance in Wales on grants is interesting. Nothing wrong with grants or other government assistance per se, but when you get to the level of complete reliance then the system needs changing.

Worse than Wales, I would say, is the position in Northern Ireland with Invest NI. They have a de facto monopoly over the majority of individual and small company innovation due to their grants system. There is also a lack of freedom of choice for the innovator over which IP firm to use because of their link with a single firm.

There are similar problems in universities due to the monopoly of the tech transfer offices and also their 'preferred' venture partners.

Anonymous said...

Nice of IP Chimp to provide the analytical techiques used by the Hargreave's review team to determine the future strategy of the worlds IP laws.

Mark Anderson said...

I agree with Gwilym that the IP system is largely for the parvenues. And that leads me to the following:

1. The Govt is misguided in thinking that yet another review of IP will assist the UK to foster more innovators. Assuming (as I do) that they genuinely want to do this. (The cynical view is that this is all a smokescreen for what the Govt really want to do, which is to amend copyright law to allow their friend Google to copy books.)

2. What parvenues want is legal certainty. There is nothing fundamentally wrong with the current IP system. So there should be a strong inertia to "leave well be" in the interests of parvenues. Yes, they could adjust their investment models if the IP system changes, but the mere fact of having to change would be a negative disruption to the market.

3. Instead of tinkering with the system, the Govt should focus on educating the less experienced parvenues (particularly SME-parvenues) about how the system works.

MaxDrei said...

Mr Roberts mentions FTO. This I see as the heart of the matter. Those contemplating investment in innovation need authoritative FTO, rendered as soon as the WO publication of the respective threatening patent applications. So, we need:

1. a subject matter classification system that allows a competent searcher to find all the threatening A publications,

2. strict application of Art 123(2) EPC (as at present)

3. a time cap on filing divisionals directed to matter disclosed but not claimed in the parent.

The EPO is at last getting a lot right. Prof Hargreaves should get himself briefed by a strategist from the EPO.

Anonymous said...

I work as an IP professional in industry and I'm constantly frustrated by the lack of education or understanding of IP - the number of times I've heard senior executives say "Our IP is of upmost importance to our organisation", but when you ask them what the IP strategy is...blank! It seems to me from this thread at least that the UK government machine also has no real understanding of IP - its innovation that is important to the UK economy, we need stuff to export to make money (real stuff, not just services).

Anonymous said...

What is really needed in the UK is a tax system that encourages innovation and risk taking. Hong Kong and Singapore for instance all use IP legal frameworks that are derived from the UK legal system and this doesn't appear to get in their way when it comes to innovation. Therefore, yet another review of the UK's IP legal system is misplaced and a waste of our the tax payer's money

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