Karl Barnfather, chairman of Withers & Rogers, discusses how the value of IP to the European economy is growing
The contribution made by IP-led industries to the European economy has increased according to a second EU-wide study published by the European Patent Office (EPO) and the Office for Harmonisation in the Internal Market (OHIM).
This is unlikely to come as much surprise to innovation-led companies in the UK, many of which have been investing large sums in R&D on a consistent basis for years. But did they realise that protecting their inventions is the key to realising their commercial potential?
The study has revealed that industries described as ‘IPR-intensive’ – those that file a high number of Community Trade Marks, Registered Design Rights and Patents – are responsible for about 42 per cent of the European Union’s total economic activity (GDP), worth €5.7 trillion each year. Compared to the inaugural report, which was published in 2013, these findings reveal a significant increase in the economic benefit attributed to IP, which was previously deemed to be worth €4.7 trillion.
The study also finds that approximately 38 per cent of all employment in the EU (82 million jobs) stems from businesses that have a higher than average use of IP rights.
This study underlines the contribution that IP-led businesses are making to the European economy and it is very positive indeed to see this economic benefit increasing.
The value placed on the contribution made by IP-led businesses to the European economy has increased by €1 trillion since the first EPO/EUIPO study was undertaken three years ago. This is a significant step forward and indicates that businesses increasingly recognise the value of R&D and are willing to invest it.
Among the top 20 ‘IPR-intensive’ industries based on their contribution to European GDP, are engineering, computer science and pharmaceuticals – all areas where we have significant talent in the UK. In order to make the most of this economic potential, however, we must continue to raise awareness of the importance of intellectual property rights and the role it can play in wealth generation.
In the past, some opportunities to commercialise successes may have been lost due to a failure to protect intellectual property. Unlike innovators in the US, some UK-based innovators are slow to consider IP protection and their failure to file patent applications can leave the door open to agile competitors seeking to copy their inventions. The UK government could do more to incentivise IP protection and in so doing, help to optimise any economic benefits. In China, for example, the government has been incentivising homegrown innovation for some time by offering cash rewards to inventors that have patents granted at home or overseas.
In the UK, fiscal incentives are already in place to encourage innovative businesses. The Patent Box regime, which allows UK-based businesses to pay less tax on profits from their patented technologies, is widely regarded as generous in scope. With a timetable for Brexit now in place, any move by the UK government to extend such tax incentives and encourage wider IP awareness would be very well timed and could help to reinforce the UK’s position as a great place to innovate.
Further incentives to encourage greater IP awareness could help to secure the reputation of these industries and enhance the attractiveness of the UK as a place to innovate.
Interestingly, the results of this European study compare very favourably with a US study published in September this year by the US Patent and Trademark Office, which revealed that the contribution made by IPR-intensive industries to the US economy was worth 38 per cent of US GDP. So, here in the UK and Europe, we must be doing something right when it comes to attracting innovation-led businesses and leveraging their IP assets – but there’s always room for improvement.
Karl Barnfather is chairman of intellectual property firm, Withers & Rogers