Time for Britain to take control of its intellectual property laws

Philip Stevens
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The UK can cut the IP cloth to better fit with changing technology and the emergence of new industries (Source: Getty)

One of the major arguments for Brexit was the desire for the UK to “take back control” of our laws, rather than have them decided for us in Brussels.

This has been a key theme throughout the process so far. The Prime Minister’s Mansion House speech earlier this month held open the door to post-Brexit divergence from the EU’s regulatory and legal frameworks which govern most business activity in this country.

Regaining the ability to legislate and regulate more favourably for those industrial sectors where the UK enjoys a comparative advantage is perhaps Brexit’s biggest opportunity.

Read more: Britain’s post-Brexit priorities are starting to smell a bit fishy

Take knowledge-based industries such as life sciences, information technology, and entertainment. Innovative products and services created by such sectors are crucial to growth; innovation is responsible for around 50 per cent of US annual GDP growth, for example.

Happily, the UK punches above its weight on several innovation measures. It accounts for 3.2 per cent of global R&D expenditures, and 16 per cent of the world’s highly cited scientific research papers.

In the annual Global Innovation Index compiled by the World Intellectual Property Organization, the UK ranks as the third most innovative country.

Major multinational companies across all sectors have significant research presence in Britain. They are collaborating with an increasingly dense ecosystem of small and medium-sized companies in clusters all over the country – but especially London.

Their collective output is jobs, growth, and a constant stream of innovative productivity-enhancing goods and services.

The UK’s strong knowledge economy is due to sympathetic taxation and regulatory policy, support for academic science, and – crucially – strong protection for intellectual property rights (IPRs).

IPRs such as patents offer crucial incentives to investors to fund risky research. They help to commercialise promising ideas through licensing, and drive research collaboration and the sharing of commercially valuable knowledge between companies and countries.

As things stand, the UK has high standards of intellectual property protection, with much of the legal framework derived from EU regulations and transposed EU Directives.

The EU itself recognises the importance of innovation to economic growth. It has crafted an IP regime that is largely superior to many competitors in Asia and Latin America, and even the US in certain areas. So why not just keep EU IP law on departure?

After departing from the EU, the UK’s IP framework will not immediately change, as most EU regulations will be preserved as part of the Great Repeal Bill.

But intellectual property rights such as patents are national rather than pan-EU rights; British lawmakers will have the opportunity to amend and adapt our IP framework over time. They can cut the IP cloth to better fit with changing technology and the emergence of new industries – even if it means gradually moving away from EU rules.

Much of the UK’s IP law should remain unchanged, but the ability to diverge is important. The European Commission – the EU’s policymaking arm – is not currently as committed to fostering knowledge-based industries as the British government, and is subject to a wide array of divergent political forces.

As a result, its new rules and directives don’t always work in the interests of individual member states or important industrial sectors.

The Commission’s review of pharmaceutical incentives, due to finalise its recommendations before the summer, is a case in point.

This review is intended to modernise specific patent rights for medicines. It is focused on the EU system of “supplementary protection certificates” (SPCs) which can extend a medicine’s patent by up to five years.

These important IP rights compensate for time taken by the mandatory period of regulator review – which can eat up to 15 of the 20 years of patent term for some classes of medicine. Equivalent rules exist in most competing markets, including the US, Japan, and South Korea.

The Commission appears swayed by arguments from the European generics industry lobby group, which wants weaker SPCs that would allow generic companies to stockpile and export copycat versions of patented medicines outside the EU while the SPC is still in force.

This would create jobs in the generic drug manufacturing industry, the claim goes.

Eroding this significant IP right sends precisely the wrong signal about the EU’s attractiveness as a base for life science investment.

It seems especially foolhardy given the increasing R&D timelines for diseases associated with ageing, such as Alzheimer’s and cancer. And it is out of step with a world where major competitors such as China are strengthening their IP systems, not weakening them.

If the UK is able to retain regulatory and legal autonomy on vital areas such as intellectual property, the EU’s questionable policy choices will no longer be our problem.

It will rather become an opportunity for Britain to differentiate itself to attract globally-mobile R&D investment, and cement its status as one of the world’s leading knowledge economies.

Read more: European Union leaders give go-ahead for Brexit trade talks to begin

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