Speech

Innovation and Intellectual Property

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Baroness Neville-Rolfe speech delivered at the Managing IP magazine 2014 Global IP and Innovation Summit in Shanghai.

Thank you for the introduction, and thank you Mr Lv Guoqiang and for welcoming me back to Shanghai. This is my first visit to Shanghai as the UK’s Intellectual Property Minister, but this is by no means my first time in China.

Let me tell you a little about myself. I worked in business for 16 years and often came to Shanghai and indeed visited the EXPO with the China Britain Business Council in 2010. I have spent time as a civil servant in government including working at 10 Downing Street and I have held senior positions in retail, television and food previously so I understand business practicalities and the bottom line.

I am really passionate about innovation, creativity and trade and I have been struck this week by how far China and the UK are now agreed on the need for effective intellectual property protection.

But first let me note that China has shown itself to be the engine room of global growth. China is also cracking down on counterfeiting, piracy and design theft, so there’s no better time for UK business to be here.

Chinese Premier Li and our Prime Minister David Cameron have described the UK-China bilateral relationship as one of “Partners for Growth, Reform and Innovation”.

And intangible business assets such as intellectual property are central to this partnership – as they are to the broader economies of the UK and China individually.

China matters economically to the UK, and Intellectual Property (IP) matters economically to both the UK and China. As a nation, our total annual investment in intellectual property rights – patents, designs, copyright and trademarks – runs at over 4% of our GDP. We have a particularly knowledge intensive economy and indeed a fine creative sector.

Commissioner Shen of SIPO mentioned on Monday that – according to an EU report – in Europe IP intensive industries account for around 26% of economic activity and the figure is already estimated to be 24% in China.

UK-China IP cooperation

The UK and China cooperate closely on IP. We share a lot of goals and common challenges. Over this week I and my colleagues from the Intellectual Property Office are visiting 8 Chinese cities: Beijing, Shanghai, Hangzhou, Suzhou, Nanjing, Guangzhou, Chongqing and Hong Kong.

Let me share some of the highlights so far:

  • On Monday I took part in the UK-China IP Symposium in Beijing, where 180 Chinese and British businesses came together to discuss IP topics with policymakers. This included exchanges on improving the appreciation of the value of IP in university business, science and technology courses and on the use of digital resources and apps by the Intellectual Property office to improve business awareness and educate our children, for example with the Music Inc app making the choices of an Entertainment Entrepreneur.

  • There were also discussions between our IP judges and experts.

  • On Tuesday we witnessed a ground-breaking collective licensing agreement between the UK’s Copyright Licensing Agency (CLA) and their Chinese counterparts which will be worth £10s millions to authors, publishers and visual artists. And we participated in a lively debate about the best way to support copyright and publishing. We talked about digital change, e-books, self-publishing, crowd sourcing and changes to news flow which are transforming the market place.

  • Yesterday in Hangzhou the China Britain Business Council – a business organisation with which I personally have a long association – signed an MOU to tackle online counterfeiting with Alibaba.

  • Most important of all, with our Embassy’s help we have had constructive talks with all the relevant Government departments including an unprecedented meeting for an overseas IP Minister, with State Counsellor Wang Yong.

  • This afternoon we are holding a workshop here on IP in the Shanghai Free Trade Zone and the opportunities that might offer.

These agreements and dialogues are incredibly important because IP systems underpin global trade, investment and innovation. And the UK-China relationship in all these areas is going from strength-to-strength.

UK-China bilateral trade stood at just under $80 billion in 2013, and we are on track to reach our target of $100 billion by 2015.

The complementary nature of our economies means that this trade is incredibly varied, covering sectors from advanced manufacturing to Scotch Whisky, from new, young fashion brands to professional and financial services. In the UK we have well-honed law on patents, trademarks, copyright and design which help companies, large and small in all these fields. We are pleased that you are working towards the same.

I should add that Chinese companies invest more in the UK than in any other European country, with the latest figures showing direct investment stock from China to the UK stood at almost $9 billion. Inward investment is now boosted by a ground-breaking guide to investing in the UK published by China’s planning Ministry, the National Reform and Development Commission, resulting in a growing and more diverse range of investments.

The UK is open for business to Chinese companies and you will find that we are supportive to investors, not protectionist in our attitudes.

The UK and China are also investing £200m in joint funding for scientific research and technology commercialisation through the “UK-China Research and Innovation Partnership”, commonly known as the “Newton Fund”. The Fund will focus on global challenges such as environment; health; and urbanisation. It builds on the existing £64 million of joint investment from Research Councils UK and their Chinese funding partners.

IP to promote innovation

In the UK we believe a good IP system should incentivise the innovation that enriches society. This is achieved by rewarding inventors and providing the opportunity to commercialise their work.

The global success of UK research and innovation – disproportionate to our population size – demonstrates the benefits of incentivising innovation.

And we particularly emphasise cross-border collaboration on research and innovation. I strongly believe that innovation is not a zero-sum world where one country’s strength in core technologies is another country’s weakness.

And the facts support this view. Scientific research produces better results when researchers from different backgrounds work together. UK-China joint papers are cited more often than papers written by researchers from either country independently. And the UK is now China’s second largest co-author of papers, second only to the US.

The same is true when we discuss cross-border technology commercialisation. Cross-border licensing of research output provides access to new revenue streams and spreads fresh, cutting-edge ideas to innovation communities around the world. This ultimately results in more and better innovation for everyone.

But the benefits of global research and innovation networks can only be fully realised if there is a transparent, rules-based IP system. Governments in particular must support this principle and resist interventions that provide short-term, unfair boosts to national champions in ways that distort markets. A level playing field for competition between international companies is crucial.

The UK believes in this. And I strongly support the comments made by Premier Li at the opening of the Global Research Council annual meeting in Beijing this summer.

Premier Li said that “scientists have nationalities, but science knows no national borders” and that “we should provide equal protection to domestic and foreign intellectual property rights”.

It should be no surprise that China is supporting a global, rules-based research and innovation environment. Chinese applicants are now the single largest group of patent applicants in the world.

We’re already seeing the results of Chinese innovation overseas. In addition to rising patent applications, Huawei has a successful London Design Centre and Chang’an have established a research and development centre in Nottingham.

UK-China cooperation for an efficient global system

Our work on IP should facilitate all of this. The UK has a constructive approach to IP cooperation with China. Primarily this means finding areas of mutual interest and working with our Chinese counterparts to support development.

One area that is of particular interest to this Summit is our work with the State Intellectual Property Office to make the global IP system more efficient for users. And by users I mean you: companies and researchers from the UK, China and elsewhere.

In July this year the UK and China launched a pilot Patent Prosecution Highway – or PPH – enabling companies to benefit from accelerated patent examination when making an equivalent application in both countries. This saves time and expense for users of our patent systems.

I encourage companies from the UK and China to use this and other PPHs, and to send us feedback on your experiences.

More broadly, the UK strongly believes that a more efficient global IP system is important. An efficient global IP system is an enabler for prosperity. An inefficient system limits our potential.

We are working with other international offices on harmonisation of areas of patent law where differences can frustrate companies looking to expand overseas.

This matters a lot to sectors like electronics, semi-conductors, LED displays, industrial components, household appliances and pharmaceuticals.

We also support the pilot global PPH initiative where we recreate the benefits of the UK-China PPH but across a network of 16 international patent offices. We hope that this pilot will be extended to more offices in the future.

It is now clear that a more efficient – and affordable – global IP system will be good for China. Last year Chinese residents made over 4,000 patent applications at the European Patent Office, with this figure currently growing at 9% per year.

These numbers suggest to me that Chinese innovation is on the brink of changing the shape of global markets. Many of you here represent Chinese companies so will understand this trend.

Closing

Distinguished guests, ladies and gentlemen, this is an exciting period for UK-China relations. In the last 12 months we have held two bilateral summits between our PM and Premier Li Keqiang and agreed that Intellectual Property is a priority for both countries.

I know that the PM will be delighted to hear that this week of events has been such a success and that collaboration on Intellectual Property and its enforcement is working well with some concrete improvements in the environment for UK businesses. We also have an agenda for further discussions in the future to which we can add today.

I hope you enjoy the rest of the day and I wish you a successful conclusion to the Summit and to hearing your feedback.

Thank you.