Intellectual Property: British Economy

Lord Johnson of Marylebone Excerpts

Tuesday 28th February 2017 Westminster Hall

[The Minister for Universities, Science, Research and Innovation (Joseph Johnson)]

It is a pleasure to serve under your chairmanship in this debate, Mr Gapes. I am grateful to my hon. Friend the Member for Selby and Ainsty (Nigel Adams) for securing this important debate and welcome the contributions of many of the hon. Members who have spoken.

During this important debate we have already heard about some of the many ways in which intellectual property and the creators and creative minds behind it contribute to the British economy. The Government recognise the importance of IP, as we expressed in our manifesto, in which we committed to making the UK the best place to patent, innovate and grow a business and to protecting IP online by working with internet service providers. I will use this opportunity to outline some of the steps that we are taking to make that happen.

It is clear that IP influences many parts of our daily lives and has an undeniable role to play across the economy. As hon. Members have noted, we as a country are rightly proud of our creative and innovative heritage. Our TV and film industries continue to enjoy worldwide success and, as anybody who watched the Brit awards last week knows, the same is very much true of our music industry, which produces what seems like an endless supply of chart-topping talent. The likes of Stormzy and Skepta were mentioned by my hon. Friend the Member for Selby and Ainsty, but there are others, such as Rag’n’Bone Man and Ed Sheeran, all of whom delivered great performances last week.

Our cutting-edge research base stands at the forefront of global innovation. The hon. Member for Sefton Central (Bill Esterson) asked what commitment the Government were making to support that R and D base. I ask him to look at the recent autumn statement, in which we delivered the single largest increase in research and development expenditure in 40 years, and we are committing a further £2 billion a year by the end of this spending review period to R and D. That clearly underlines the Government’s commitment to this country’s remaining at the cutting edge of science and innovation for years to come.

This is not just about pride; the statistics speak for themselves. Every year since 2001, investment in intangible assets has outstripped investment in physical assets. In 2014, UK businesses invested over £130 billion in intangible assets—£11 billion more than in physical assets. Over half of that £130 billion was protected by IP rights. That not only highlights the sheer demand for UK IP rights, but demonstrates the fact that many businesses, innovators and creators already recognise the benefits of IP protection, of which there are many.

IP rights encourage investment in research and innovation, reward original design and branding, and support all types of creativity. Businesses that manage their IP well grow faster and are more resilient. The use of patents, trademarks and designs is linked with the better creation, transfer and use of knowledge and higher firm productivity. One reason behind that is that the UK’s robust IP regime plays an essential role in improving the balance between risk and reward for innovation and creativity.

Hon. Members have noted that IP enjoys a prominent place in our industrial strategy Green Paper, in which the Government touch on IP in several ways. For example, we have announced a new piece of independent research on approaches to commercialisation in universities, as the hon. Member for Sefton Central mentioned. That will look at approaches to commercialisation, including how universities approach licensing intellectual property. That is just one of a number of announcements that were made in the Green Paper, which sets out the Government’s plans for a long-term strategy that builds on our strengths and prepares us for the years ahead.

The Prime Minister has been clear that we need an economy that works for everyone. The Green Paper marks the beginning of a dialogue to develop a strategy to deliver that. The UK already boasts one of the best independently judged IP systems in the world—the hon. Gentleman mentioned the Taylor Wessing ranking, which puts us third—but the Green Paper clearly signals the steps that the Government are taking to ensure that our IP system is not just fit for purpose, but unlocks the potential for creativity and innovation up and down the country. That includes a commitment to review how to maximise the incentives created by the IP system to stimulate collaborative innovation and licensing opportunities. The emphasis is on developing a strategy that spreads the benefits of our economic success across the UK. That is why the Government have also announced that IP representatives will be placed in UK cities in the northern powerhouse and the midlands engine—Manchester and Birmingham—to build local capability to commercialise intellectual property.

Let me turn to the importance of IP enforcement, which was a theme in several hon. Members’ remarks. Wherever the market—at home or overseas—the success and economic value of the UK’s intellectual assets highlights the potential risks when IP rights are not respected. The Government take IP enforcement seriously and believe that effective enforcement plays a vital part in supporting our creative and innovative industries. Effective IP enforcement also plays a vital part in denying funds to the many organised criminal gangs involved in counterfeiting, and in mitigating the harm—mentioned, for example, by the hon. Member for North Antrim (Ian Paisley)—caused by unlicensed manufacturing, which often goes hand in hand with labour abuse and environmental abuse.

The UK boasts one of the most innovative IP enforcement networks in the world, but we can never afford to rest on our laurels.

[Pete Wishart]

In our inquiry into protecting intellectual property, we heard just how threadbare trading standards is now, with the smallest resources that have ever been applied when it comes to protecting some of these areas. Will the Minister promise to look at that and perhaps to address some of the failings in resourcing trading standards?

[Joseph Johnson]

We certainly want trading standards to perform the function that we need it to perform, and we believe that the resources are in place to enable it to do so.

As I was saying, the UK boasts one of the most effective and innovative IP enforcement networks in the world, but we cannot afford to rest on our laurels. There are always new challenges to address. My hon. Friend the Member for Selby and Ainsty and the hon. Members for Cardiff West (Kevin Brennan), for North Antrim, and for Perth and North Perthshire (Pete Wishart) were right to recognise the serious challenge that illicit TV streaming and IPTV boxes pose to our creative industries. We will vigorously combat the normalisation, as the hon. Member for Cardiff West put it, of that harmful activity. It is theft. Last Thursday, the Government published a call for views, as Members have mentioned, to determine whether the existing legislation is working to tackle this important issue. It would not be appropriate to pre-empt the outcome of the call for views, but if the case is made that legislative change is required, the Government will take the necessary steps.

[Kevin Brennan]

I again urge the Minister to consider trying to do something about this issue in the Digital Economy Bill before it completes its stages in the House of Lords.

--- Later in debate ---

[Joseph Johnson]

I am pressed for time, so I will give the hon. Gentleman a short reply. A number of cases in the legal system are currently testing whether we have sufficient legal powers to take the kind of action that we all want. Bits of legislation are potentially relevant—including the Copyright, Designs and Patents Act 1988, the Fraud Act 2006, the Proceeds of Crime Act 2002 and others—and we need to see whether they will prove adequate for the task at hand. Cases that are in the pipeline will give us a good sense of whether further legislation is needed.

More broadly, we continue to build on our success in the area of IP enforcement, guided by the new IP enforcement strategy, which was launched in May last year. Innovative solutions that are already in place include the IP intelligence hub and a wide range of voluntary initiatives with partners. Being active on so many fronts has enabled the Government to ensure that UK rights holders have a system that they can rely on.

One of our strongest assets is the police intellectual property crime unit, which is an operationally independent body that works with industry, Government and other law enforcement agencies to counter IP crime, such as counterfeit goods of the kind so graphically described by the hon. Member for North Antrim, which are so detrimental to the economy and businesses and which can be harmful to consumers. The Government are in the process of discussing how PIPCU will be funded in future and will make a statement in the coming weeks. However, the unit is just one aspect of the work that the Government are supporting to address IP crime. We remain committed to tackling the multiple challenges that are posed by IP infringement.

The hon. Member for Glasgow North (Patrick Grady) asked about the Government’s role with respect to the Performing Right Society and the minimum £38 tariff for live music concerts, and that is primarily a commercial negotiation between the rights holders and licensees. I know that the Music Venue Trust has been active in that area. Licensees and their representatives can bring a case to the Copyright Tribunal, which is an independent judicial body, if they are unhappy with the terms of a licence.

Turning to the point made by the hon. Member for North Antrim with respect to whether Governments should create a contract adjustment mechanism, we are currently looking at that issue at a European level, as he knows. Intervention on freedom to contract needs careful consideration before Governments weigh in. The risks of reducing the incentives for businesses to invest in new talent are ones that we must take exceptionally seriously, but we need to listen to creatives too. In particular, I welcome the hon. Gentleman’s support for the digital deals declaration—

[Mike Gapes (in the Chair)]

Order.

Motion lapsed (Standing Order No. 10(6)).