FinancialGuy Writes!

On Wednesday this week, the Brussels based Lisbon Council hosted an event about IP and copyright laws titled, “How the Intellectual Property Framework Supports Innovation and Growth“.

Your author has been doing a lot of reading about these topics in recent weeks and found this to be another very interesting event from the Lisbon Council.

There is no point in hiding from the truth, IP and copyright are very complicated areas. The more reading I do, the more I recognise just how little I understand. And this is one of the reasons why change is a must for Europe – anything this important and this complex has to be changed!

Before the event, I chatted to an economist that follows this area closely. Perceptively, he described IP and copyright as being “like a plate of spaghetti – as you pull at something, there is always more wrapped around it”.

The event itself focused on a report by Professor Ian Hargreaves. Prof Hargreaves has been tasked with investigating this arena by David Cameron and his report titled “Digital Opportunity: A Review of Intellectual Property and Growth” was the result.

I won’t go into the report, I couldn’t do it justice. It can be downloaded from the Lisbon Council link above.

Instead, I would like to focus on the areas that really stood out for me that anyone can grasp.

Prof Hargreaves explained that in the modern world, we are more dependent upon intangible assets than ever before. However, the excessive protection of rights stops other interesting innovations and the potential for the innovations that follow them. We need to ensure that the digital content market is working as well as possible and this is not happening now. His recommendation for a digital content exchange is fascinating and well worth further reading in his report.

He believes that altering the IP and copyright systems has the potential to benefit the UK by 0.3% to 0.6% of GDP per year. In other words, these are benefits that would keep on coming year after year. Not too shabby!

As he said, “Making these changes is a political no-brainer!” That isn’t something you hear in Brussels too often. “If the UK and EU economies continue to take no action they will be self-harming”.

While acknowledging that making changes will be complex, Prof Hargreaves feels that we simply must get started. The changes required are not, he says “risky” and that his “report is not avant garde – it is all pretty obvious, therefore the actions of governments ought to be pretty obvious too!”

There are also sound regulatory reasons for making updates and changes. The online world, as with financial services, can be run potentially from anywhere, as this author is living proof of. Unclear or unhelpful rules will almost certainly push online businesses towards locating in other jurisdictions, which likely means less regulated locations, less job creation and less taxes. We have all seen the impact that regulatory arbitrage by hedge funds has had on financial services and the global economy.

Alas, it is not so easy. After years of debate and lobbying, he feels that the UK is stuck in a “snowdrift” of positions and unless everyone backs off and takes a fresh view, and is willing to make some compromises, everyone will continue to suffer. As always, the position in the EU is the same, but more complicated…

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  1. Very well stated.

    The complexities of this are indeed manifold.

    Take for example the corresponding issues of an originator of a Patented Process in one Country being Licenced to use these in the EU and then operate them outside the EU in the Far East. The current system calls upon the back-to-back use of “rights of let” where the pass through system rules. Alas there are countries in the Far East that hasten not to accept Patents and totally ignore them: take the Volkswagen experience in the PRC and the Danone caffuffle in India. So what to do?

    I suggest that the issue of control is one but there are wider observations. Neither India or the PRC will abide by these and so the obvious is that we will continue to apply new rules that place unecessary costs on these Countries (or others similarly inclined to bypass them.)

    My experience is that the result is the “apparent need” to icrease costs to accommodate the issues by levying the front-ended Patent and Copywrite issues in a legal payment against the end-user and suffer the penalty of costs in a proposal. After all 14% of a project which is 40% lower than that in the EU is not that much of an impediment.

    1. Thank you Karel for your thoughtful observations.

      You highlight, of course, another very big issue. While the EU and Member States are grappling with internal rules and how to potentially harmonise them, there is the separate – but very important – issue of non-EU nations. As you point out, there seems to be precious little IP or copyright protection in countries like China.

      I won’t lie, that is an area which I have deliberately avoided reading about – the complexities inside the EU need Masters level of study to understand, without venturing outside.

      Can I ask you to elaborate on the numbers you mention above please? What is the 14% of a project?

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