Gowers Review of Intellectual Property

Introduction

The UK’s Intellectual Property framework, both in legal provisions, and in the operations of Government, is a critical component of our present and future success in the global knowledge economy. Our economic competitiveness is increasingly driven by knowledge- based industries, especially in manufacturing, science, and the creative industries. The creative industries alone accounted for 7.8 per cent of Gross Value Added (GVA) in the UK in 2003 and grew by an average of 6 per cent per annum between 1997 and 2003. (DCMS Creative Industries Economic Estimates, DCMS (2005))

Intellectual Property protects the value of the knowledge that resides within goods and services. IP is one way of giving incentives to people and firms to invest resources in creative or inventive activities ranging from Pharmaceutical R&D to television documentaries. The IP system is made up of a small number of flexible instruments (copyrights, patents etc.) that are broadly adapted for creations, inventions, designs and product identifications. Whilst these statutory monopolies provide the incentive to invest, they are strictly limited to balance their costs: principally limited competition, high prices, and limited ’spill-over’ benefits of that knowledge. The state must ensure that this balance is appropriate. Equally important is the state’s role to award IP efficiently, and enable the market to use, licence and exchange that intellectual capital. Finally, it must ensure that IP owners can enforce their rights through both technical and legal means.

Globalisation & technological change have both raised tensions in the existing IP system. UK firms have greater opportunities to maximise the value of their IP abroad, and are simultaneously subject to foreign competition in domestic markets. Digitisation has radically lowered the cost of duplication as well as distribution, and the process of innovation has become ever more ‘networked’, particularly in high-tech sectors: a new invention typically involves more IP, and more firms collaborating, than 30 years ago. Indeed, in many areas it is no longer just firms who are responsible for innovation – consumers themselves increasingly play a part in developing innovative goods and services.

While it has been suggested that the present UK system strikes broadly the right balance between consumers and rights-holders, it also appears that there are a variety of practical issues with the existing framework. For example: