Contribution that brands make to the UK economy
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Speech by Baroness Neville-Rolfe on the valuable contribution that brands make to the UK economy through their Intellectual Property (IP).
Ladies and Gentleman. Some of you will know that Winston Churchill, at the end of the World War 2, said that Britain was left with nothing but the abilities of her people. It may have been an exaggeration, albeit an understandable one, but it is true that the United Kingdom has fewer natural resources than many other countries.
We have, therefore, for some time, had to rely more on brains and knowledge rather than resources, and I believe that we are very good at doing this.
So it’s easy to see why intellectual property, of which branding forms an important part, is so important.
Let me say at once and before I begin that many of you know much more about brands than I do.
Brands are more than ‘just’ trade marks. Think of ‘Innocent’, ‘Penguin’, ‘Range Rover’ or ‘Virgin’. They all create a certain picture in the minds of every one of us and improve our lives.
My experience as a businesswoman has made me understand how essential strong brands are for companies. They not only set the scene for customers and convey messages, but they also make promises. If a company delivers consistently, then a brand can make a very real and intense connection to its customers. Loyalty will be the reward.
Branding has evolved through the years. Over the past few decades, the number and range of products offered to consumers has increased dramatically and brands have become more important.
Branding has considerable value as a tool to engage with customers. But, brands are tangible things too and have very real balance sheet values.
According to a recent Brand Finance study, the value of the top 50 British brands has increased by over £37 billion since last year. And, for those in the consumer product arena, brands can form between 50% and 70% of a company’s market value, more for a brand as totemic as Burberry which I visited recently.
And it is clear that such brands are valuable both domestically and in the export market.
Moreover, research suggests that companies that regularly register trade marks - which are important components of branding- experience greater growth - create more jobs and pay higher wages. The UK invests more in ideas and knowledge than it does in bricks and machinery, and this is not surprising when you consider that businesses that protect their IP are less likely to fail.
Luckily businesses are becoming increasingly aware of the advantages that branding can bring. And this explains why UK investment in branding has increased exponentially over the past decade or so: from £4.8 billion in 1990, to £14 billion in 2011 and no doubt more since.
We have seen domestic trade mark applications rise each year since 2010. There were over 2,000 more applications last year as compared to 2013. You will have seen, included within your delegate pack, further information highlighting the importance and reach of trade marks and brands more generally. I am always mesmerised by key statistics. I hope they help you to understand the value of IP as well.
I am glad that our IP system has recently been ranked very highly on the US Chamber of Commerce Intellectual Property Index. It is second only to the United States in the overall economy score and joint first in respect of trade marks.
Furthermore, your own Taylor Wessing Global IP Index report ranked the UK as being the best jurisdiction in which to obtain, exploit and enforce the main types of IP rights.
But one thing my time in retail taught me is that you can never stand still. You will know from your own fields that businesses must constantly strive to innovate and be better – that’s also true in government. Whilst I am delighted and proud of our achievements I know we can and must do more if we are to retain the coveted top-spot.
This is why with my dedicated officials at the Intellectual Property Office (IPO) - I am absolutely committed to ensuring that the UK has a robust IP system that allows business to invest, exploit and thrive.
Over the past few years this government has worked to identify areas that have been problematic for brands. We have improved the legal framework here and internationally. We are educating businesses and students about the value of brands and we have focussed on enforcement. To allow brands to succeed and grow we must have an effective enforcement framework not just here in the UK but where our brands are marketing themselves – and that means right across the European Union (EU) and across the globe.
Over the past couple of years we have delivered a wealth of initiatives aimed at supporting business.
Counterfeiting is an ongoing and pernicious problem – that is why, in September 2013, the government established the Police Intellectual Property Crime Unit (PIPCU) and in the autumn we secured the future of this vital team until 2017. They have made 44 arrests. More than 5,500 infringing websites have been suspended. You will be cheered to know that over 98% of these were suspended for selling counterfeit goods. And, the unit has also been active on the ground - seizing more than £2.4 million worth of fake goods. Above all it has changed the culture and demonstrated to the crooks and fraudsters that a crack police unit are after them. PIPCU has attracted a lot of positive international comment as well.
This government, through the IPO, has also seen the introduction of Operation OPSON, a joint Interpol-Europol operation, which began in 2011 to tackle the production and sale of counterfeit food products. Last year we were responsible for driving the seizure of over 2,500 litres of counterfeit alcohol. The corruption of alcohol is one of the most dangerous crimes, as we know from a large number of deaths in the Czech Republic in 2012. The illegal factory in Heanor, Derbyshire that OPSON closed down could have killed people as well as hurting the brands concerned.
In June last year the UK government, alongside the Commission and Office for Harmonization in the Internal Market (OHIM), hosted the inaugural IP Enforcement Summit. The Summit discussions demonstrated an unremitting desire, by all those who attended, to work together to tackle the global IP challenges. Of course, brand owners and rights owners also have an important part to play in protecting their rights and their involvement was critical with a strong keynote speech from Paul Polman, CEO of Unilever.
It is important that we keep looking at the legal framework to make sure that it is in tune with the needs of business. Last year my predecessor took the IP Bill through Parliament, and it became law on 1 October 2014. Design law, often an important component of branding, was messy and too weak. The Act has introduced a number of new measures and some changes to make design law simpler, clearer and more robust. This is important to brands, especially in clothing and accessories.
Of particular note, the Act strengthened the enforcement of design rights by introducing criminal penalties for intentional copying of registered design.
In Europe, the UK has been very active in negotiations on the reform of the European trade mark system now coming to an end. We have been successful in amending the measures to make them more measured, allowing legitimate trade to continue, and increasing the opportunity for trade mark owners to take action against infringers.
I am also committed to improving the evidence base so that we can better inform policy making. That is why my officials at the Intellectual Property Office have been working hard to develop their research portfolio. We will soon be tendering research to measure the levels of registered and unregistered design infringement.
A short time ago I mentioned the importance of protecting brands in global and growing economies. The Chinese trade mark system received 2.3 million applications last year – let’s just pause and think about that number – UK brands sell well in China – we can trade on our reputation for tradition and quality. China is also where many of our branded products are made.
So last year I was pleased to lead a UK delegation to China for a week of talks in 8 cities. During this visit I facilitated a landmark agreement between the China Britain Business Council (CBBC) and Chinese e-commerce giant ‘Alibaba’ which is helping to address the tens of millions lost to Chinese counterfeiting and piracy via the online platform each year.
Additionally, beginning in 2011, the Intellectual Property Office has deployed 4 specialist IP attachés in some of the world’s most challenging and fastest growing markets: China, India, Brazil and South East Asia. I can announce today that they have provided one-on-one practical help and support to 537 UK businesses experiencing IP issues, with an estimated value at risk of over £398 million. Around half of these companies sought help from the IP attachés within the first few months of operating abroad. This is when access to expert, impartial and free advice is most important to businesses. The attachés have also helped an additional 8,400 businesses via 341 outreach and education workshops and events. These are fantastic results so far and I hope some of you will have the opportunity to draw on their strength.
Of course, whilst there have been many successes, there are several knotty issues that have been keeping us busy.
We have all seen examples of look-a-like packaging on our supermarket shelves. This is a particularly complex issue that has divided opinion. My time in business has certainly been useful in providing me with an understanding of the complexity of this issue. However, whilst I am able to understand the own brand perspective, I am also empathetic to the concerns of brand owners whose goods are copied. Indeed, having a holistic understanding is very important.
I know this issue is important to many of you and I was very pleased that the government committed to a consumer review of lookalikes. Whilst responsibility for this review sits with my Ministerial colleague - Jo Swinson, I remain very interested in the outcome. We expect the report to be published soon.
I am sure that you will also be aware of the recent commitment to introduce standardised packaging of tobacco. Again, this is a policy which had divided opinion. Let me assure you that my officials and I have been working tirelessly to ensure that the potential impact on brand and intellectual property has been given full and proper consideration.
We have been sure to emphasise the vital role that brands play towards the UK’s economic well-being. I want to be clear that the government has no intention to extend standardised packaging to any product other than tobacco. The government sees the introduction of standardised packaging of tobacco as a unique approach to tackle smoking and its appalling effect on public health.
So to conclude, intellectual property is a vital British interest and the brands it supports are increasingly important here and overseas.
Your conference today rightly focuses on the global perspective, in particular the trade marks regimes of developing countries, and looks towards recent internet-based IP developments.
We are living in an age of fast, furious, electronic communication. Whatever applies to brands in their more tangible form will also apply to brands online. Therefore effective international systems, which support IP rights and global trade and investment, are crucial.
Ladies and Gentlemen I would like to thank you for inviting me to join you this afternoon.
I look forward to hearing the results of your discussions and to a continued dialogue about the future of brands.