Speech

Intellectual property: UK and China cooperation

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

Speech at the UK-China Intellectual Property Symposium on improving our relationships with China on intellectual property matters.

Commissioner Shen, thank you for inviting me to China and for co-hosting this second UK-China IP Symposium. This is my first visit to Beijing as the UK’s Intellectual Property Minister, but this is by no means my first time in China.

I worked in the government service for over 20 years, including serving the then Prime Minister at 10 Downing Street.

I then worked in business for 16 years for one of the world’s leading retailers and for the last 2 years as President of Eurocommerce, the European, Brussels based association of retailers and wholesalers.

I have always had a passion for encouraging innovation both when I worked as a civil servant, an unusual trait in that role some may think, as well as in the consumer goods industries and indeed as a non-executive director in television.

I am fortunate in having visited China and Beijing many times both with Tesco as we made our various investments in China and with the China Britain Business Council of which I was a Vice Chairman. I also came with David Cameron, the UK Prime Minister, on his first visit to China and joined him at Beijing University where he spoke of wanting a strong relationship with China.

This symposium is in part the result of his second visit last December when your Premier Li Keqiang agreed that the UK-China IP Symposium was a valuable event for both countries.

Having said all that I am also conscious that China is a large and complex country and no-one can expect to grasp more than a small part of its culture. This varies a lot, not least in terms of different climates, diets and wonderful Chinese cuisine.

This Symposium – and the planned week of UK-China IP activities taking place across the country in 8 cities - Beijing, Shanghai, Hangzhou, Suzhou, Nanjing, Guangzhou, Chongqing and Hong Kong – is an important part of UK-China cooperation to construct a global IP system that promotes trade, investment and innovation.

The benefits of an efficient and fair global IP system are huge, for both the UK and China.

It is well established – and I speak as someone with a background in economics – that increased trade can and mostly does benefit both parties. I believe strongly that this is also true for Intellectual Property protection. With an effective framework both sides will gain. And with Intellectual Property investment estimated to be worth £63.5 billion in the UK alone, the prize is huge.

This seems to me to be the intellectual framework for the issues we will debate during this important symposium. Let us work together to improve the legal framework, create incentives for the creation of new ideas and the respect of the property rights involved and of course, let us work together to enforce the rules better.

The facts support the view that 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 cutting-edge ideas around the world. This 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 or distorting boosts to national champions. A level playing field for competition between international companies is crucial.

The UK believes in this. And I was very struck by 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”.

As a long term observer of China I am also very pleased to see that it is now supporting a global, rules-based research and innovation environment. Chinese applicants are now the single largest group of patent applicants in the world. 80% of the 800,000 invention patent applications to the Chinese State IP Office last year were from domestic applicants.

And given my passion for innovation, I am glad to see the results of Chinese innovation overseas: over 4,000 European patent applications by Chinese residents entered the regional phase at the European Patent Office last year.

This brings me on to today’s theme of specific UK-China cooperation. Prime Minister Cameron and Premier Li have described our relationship as “Partners for Growth, Reform and Innovation”. How do we translate this into concrete action? Well the first driver is trade.

And I would make 2 points here:

First, 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.

Second, 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.

Another driver is joint research.

The UK and China are investing £200 million 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

This is all facilitated by increasing people-to-people links, with Chinese visitors to the UK growing at a rate of over 30% per year. These are recognised in the Newton Fund, with £14m of joint UK-China funding to deliver even more fellowship and researcher exchanges; and Huawei has a successful London Design Centre and Chang’an automotive has established a research and development centre in Nottingham

We are building a platform for our companies and researchers to go out into the world with confidence. Let me give you some examples of where our emerging IP work can make a real difference:

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 the same application in both countries

Building on the PPH, I would like to propose that the UK and China will exchange analysis on topics related to achieving a more efficient global patent system. This matters a lot to sectors like electronics, semiconductors, LED displays, industrial components, household appliances and pharmaceuticals

Elsewhere, our copyright cooperation is boosting the economic value of both British and Chinese creative industries. Tomorrow (2 September 2014), I will be present for the signing of a bilateral agreement on copyright licensing in the publishing industry, the latest step in our joint work on Collective Licensing and other legislative reforms with the National Copyright Administration of China (NCAC).

The economic evidence here is clear; good collective licensing can contribute hundreds of millions to the economies of both the UK and China. And all of our lives are enriched by cultural products, with Chinese consumers now enjoying the British TV series ‘Sherlock’ and ‘Downton Abbey’, listening and perhaps just as important watching ‘One Direction’ and reading ‘Jamie Oliver’ and ‘Peppa Pig’ in Chinese.

In the other direction, the British public is now becoming familiar with Chinese literature through published translations by Penguin. ‘Decoded’ by Mai Jia is receiving great reviews. And we will also soon be able to read ‘Frog’ by Nobel Prize winning author Mo Yan.

One final example is our joint work on anti-counterfeiting and piracy. This week there is a new groundbreaking agreement between the China Britain Business Council (CBBC) and the Alibaba Group on IP protection and e-commerce. This extends our cooperation on counterfeiting to the Taobao and Alibaba platforms. China now has the largest e-commerce market in the world and it is crucial that consumers have confidence in the products they buy.

Our government to government cooperation on IP enforcement with the Ministry of Public Security on international IP crime networks is also producing results, building on a milestone joint operation in the twin cities of Shanghai and Liverpool earlier this year.

By building confidence between our respective agencies it is intended to develop this type of co-operation as ‘business as usual’ making it that much harder for criminals to undermine our consumers’ safety and damage legitimate businesses in both countries.

The IPO funds a specialist IP unit within the City of London Police – ‘PIPCU’ – which continues to play a key role in this success.

So, we’re working on big, important issues here: global patent system reform; creative industries promotion; and tackling international criminal networks.

There is also a legal stream to our work.

I travel this week with a large delegation of officials and experts from the private sector.

Later today British patent and trade mark attorneys will demonstrate to you why I believe they are a great choice for Chinese companies seeking to obtain IP protection in the UK; they are also an excellent choice for Chinese companies wishing to make wider applications at the European Patent Office or at the EU’s own equivalent.

World-leading UK private sector experts are also advising Chinese policymakers on Free Trade Zones. This work is led by TheCityUK with the full support of the British government. I will host a workshop on IP in Shanghai to encourage innovation in IP enforcement in Shanghai’s Free Trade Zone.

And I am also delighted to be in Beijing at the same time as Mr Justice Birss of the High Court of England and Wales. Of course, judicial exchanges are rightly separate – and independent – from our government dialogues. But in an integrated global economy it is encouraging to see judges sharing information on their approaches.

So you have just heard great examples of cooperation between our 2 countries and I would like to move now to recognise the success that China has made in developing its IP laws since the first modern IP law in China was enacted in 1983.

Parts of the Chinese IP system are acknowledged to be world leading. Before I left the UK, British companies told me about several areas that work well in China, including:

  • border detentions by China Customs, which help protect the global commercial interests of legitimate traders
  • sophisticated judgments in the Chinese courts
  • enforcement of IP rights at trade fairs in China
  • and the transparency and openness to stakeholder input during recent legislative reforms

So our message to British companies is clear: IP concerns should not stop you pursuing business opportunities with China.

Yes, risks do still exist – China is a fast-developing country with a very different business culture to the UK. But we are working together with our Chinese counterparts to help improve British company IP outcomes in China.

In conclusion both China and the UK have a strong interest in a consistent, predictable global IP system that is good for business, good for innovation and good for society. The UK-China IP Symposium week is an important part of our work to achieve this.

I look forward to working together to further increase the positive impact of our work in the weeks and years ahead.

Thank you for listening.