The power of brands
Baroness Neville-Rolfe talks about the power of brands at the Lewis Silkin Brand Academy.
Thank you Simon for your kind words of introduction.
Many people don’t know that I began my career in the Civil Service. One of my most interesting posts in the service was when I worked as private secretary to John Silkin MP, then the Minister of Agriculture. He was a senior partner at Lewis Silkin, which had been founded by his father after whom the firm was named. John Silkin became the godfather to my eldest son, so it is a particular pleasure for me to be here with you all tonight.
The question that you’ve posed is whether the power of brands is an opportunity or a threat.
There can be little doubt over the question’s assumption that brands are powerful.
I met with a major British fashion house recently and we discussed the proportion of their company’s value that was in their brand and its IP.
How much do you think they said? Hands up if you think it was more than 25%? 50%? 75%? It was in fact up to 90%. Ninety per cent of their company’s value was concentrated in their brand. Brands are important because they allow products to gain recognition, including international recognition.
Inevitably this leaves them vulnerable to threats. Certainly, counterfeiters are a major concern.
The need to protect brands was one of the reasons why the 2015 Conservative manifesto included a pledge to make the UK the best place in Europe to innovate your products, patent your new ideas, and grow your businesses.
The Intellectual Property Office has today published its new strategy. One of the things it sets out is how we will support this through education and respect for IP.
I know from my experience as a businesswoman at Tesco, ITV and PWC how valuable strong brands are to businesses.
Research suggests companies that invest in branding experience more growth, create more jobs and pay higher wages.
But a strong brand is difficult to maintain. It not only sets the scene for customers, but also makes implicit promises. Without keeping the trust and adhering to the values of your customers, brand loyalty will wane.
So this evening I would like to talk to you about 3 components of branding that I believe are vital: enforcement, international connectivity and a robust legislative framework.
Enforcement and supporting brands
IP crime is challenging, particularly in the online world. I have therefore been pleased to see the breadth and variety of enforcement activities over the last year, by brand owners, the government, enforcement agencies and through us all working together. Last year’s IP crime report 2014 to 2015 highlighted a number of specific achievements.
The Police Intellectual Property Crime Unit (PIPCU) diverted 11 million views of pirate websites to an official police warning page and seized counterfeit goods worth £3 million.
PIPCU is so effective because it brings together a partnership of enforcement agents and businesses.
It’s this partnership that allowed it to also suspend nearly 3,500 rogue websites selling fake luxury goods.
PIPCU is well regarded internationally. When I was in Washington earlier this month, Danni Marti the White House Intellectual Property Enforcement Coordinator, told me that it is ‘widely applauded by US business’.
On top of this, the National Market Group’s Real Deal initiative, now involving around 400 markets, led to the seizure of more than 30,000 counterfeit items. And this week we announced a new initiative by Manchester Police, who will draw on PIPCU good practice so that Cheetham Hill, with its textile heritage and organised crime network, no longer provides a counterfeit warehouse for Britain’s local online businesses - costing reputable brand owners and retailers a fortune and endangering the public.
We need to keep working together in fighting piracy and I am pleased to see that, thanks to your hard work, courts now require ISPs to block access to infringing websites.
As another part of our approach to crackdown on brand, design and copyright theft, I am also working with the advertising sector and search engines to ensure consumers can easily access legitimate content at the right price. This should help to dry up the income of illegitimate retailers.
International dimension
I know that trading overseas still presents problems where IP needs to be protected.
In this context China is especially important. In 2014 I visited China with the largest ever IP delegation from the UK and last year I was delighted to open the UK-China IP Symposium in London during their president’s state visit. Indeed, several businesses here tonight took part, including BT, Pentland and Unilever.
Through this visit, we managed to broker an agreement with Alibaba, which has led to the removal of £8 million worth of counterfeit UK goods from their platforms.
This is a good start. We all hope that the UK-China relationship will continue to develop positively especially as regards IP. It is an important market for our brands despite the recent slowdown.
The IP framework
I believe that a strong IP system that protects brands is key to encouraging innovation, delivering continued economic growth and creating jobs.
Our trade mark systems function well. The time from filing the application to first examination at the UK IPO standardly takes 9 to 10 days. But we know we can do better to improve the trade mark system for users.
Recent EU legislative reforms will improve things further – making the process for trade mark protection easier, cheaper and clearer.
These reforms will also allow customs authorities to seize infringing packages. We are aiming thus to cut off counterfeit goods at the source. A balanced approach is, of course, vital and I am pleased that we secured safeguards to minimise any adverse impact on legitimate trade.
We will be consulting on how best to implement these changes – including the provision on goods in transit as we update the Trade Marks Act.
But many different IP rights go into creating strong brands. Brands are more than ‘just’ a trade mark. Brands must not forget about designs.
It’s well known that the design industry plays to British strengths. Undergraduate enrolment for creative arts and design courses grew at 4% last year – the fastest rate of any subject area. Our creative industries are a strong growth driver. They accounted for 1.8 million jobs in 2014. That’s one out of every 17 jobs in the country and up 5% on 2013.
The Design Council estimated that, in 2013, design generated over £70 billion in gross value added. That’s 7% of total GVA. Design turnover increased by almost 20% between 2009 and 2013 and design-influenced exports grew by more than 50%.
But registration levels for designs are generally lower than other IP rights, so the government has been working hard to make the design framework simpler and cheaper so that businesses can make the right choice for their business model.
We have consulted on the UK’s accession to the Geneva Act of the Hague Agreement on Designs, which will enable designers to register up to 100 designs in more than 64 territories through a single international application.
In last week’s government response, there was strong support for the proposal and we will now continue with our plans to join towards the end of this year.
We are also reviewing the design rules and consulting on levels of registered design fees – to make sure they meet the current and future needs of customers. The cost of renewing a design for the maximum 25 year period is coming down by over 60%.
Working with brands: remaining challenges
Of course, as with any part of government, our brands work is not without its challenges.
You will be aware that the report on the enforcement of the Consumer Protection from Unfair Trading Regulations 2008 – also known as ‘the look-a-like report’ - was published in October. I know some of you will have been disappointed by the decision not to give businesses a power to seek civil injunctions against look-a-like packaging. I hope you will accept that the report took a comprehensive view of the arguments, and that we carefully considered the issues before making our decision.
What the decision emphatically does not mean is that we somehow do not recognise the importance of brands. Nor do we underplay the need for effective enforcement. That is why, in 2014, we amended the regulations to give consumers a new private right to bring their own civil actions. This makes it simpler for consumers to enforce their rights when they have been a victim of a misleading commercial practice.
It is important that Trading Standards officials are aware of the routes for enforcement through the IP framework.
We will be pioneering regional events focusing on IP with a specific case study on look-a-like packaging. This is a step change in our relationship with Trading Standards and great news for brands who suffer from look-a-likes and counterfeits.
I know that British Brands Group has kindly agreed to work with IPO officials on putting together material for the training courses and I am very grateful for their assistance in this important work. I’m pleased to see that John Noble, Director of British Brands Group, was on the panel tonight. I trust that it was a lively discussion.
Conclusion
The UK is rightly proud to create and host some of the world’s most powerful and trusted brands.
While this brings some threats, these are outweighed by the far greater opportunities that powerful brands offer.
These opportunities are there for you to take. Our challenge is to continue to deliver on our manifesto pledge to make the UK the best place in Europe to innovate, patent new ideas and grow a business while reducing the threats from civil infringement and criminal elements.
Achieving this will allow you to harness the enormous international potential of your brands. This is good for business, good for consumers and good for the economy.
We have already achieved so much. I value the relationships we have forged and am excited by the prospect of what more we can do – together.
Ladies and gentleman, thank you for listening.