Earlier this month, David Cameron told a group of high-tech business leaders that the government would encourage organisations to create a UK tech hub in the East End of London to rival Silicon Valley.
As part of its bid to support investment in the area, the government plans to embark on a six-month intellectual property (IP) review that aims to encourage the type of high-tech businesses that have flourished in the US, but are struggling here.
Some of the government’s proposals have been outlined and these include reconsidering the UK’s fair dealings law, which many argue is too stringent for companies operating in today’s global economy.
Jonathan Silverman, a lead IP partner at City law firm Silverman Sherliker LLP, said: “In the States the doctrine of ‘fair use’ allows for minor, non-commercial use of copyrighted material without infringement. Whereas over here it is more complex and our ‘fair dealing’ is limited to use for educational purposes, review and criticism – but this is set for an overhaul,” he added.
Similarly, the current IP framework can be difficult for SMEs and startups to manage, as it can be expensive and slow to secure patent protection for an invention. Lower fees and a quicker process would give smaller businesses breathing space and arguably aid innovation in the UK.
Content and Code, a supplier of Microsoft business solutions, is based on “silicon roundabout” in Old Street, and believes the review will benefit the UK.
“I hope that the review will introduce increased levels of flexibility and fairness to prevent restrictive limitations on technological growth and innovation,” said Tim Wallis, CEO and joint owner of Content and Code.
A peer-to-patent project is also being developed, which again has been inspired by a US system. This would see selected reviewers commenting on new ideas put forward for a patent, and peers then rating these reviews.
The top 10 reviews would be forwarded to the patent examiner, providing him with more detailed information than would currently be available. At the moment the UK is reliant on a single examiner to decide if an idea is new and warrants a patent. This can lead to costly legal disputes.
The Federation Against Software Theft (Fast), which has been contacted by the Department for Business, Innovations and Skills to participate in the IP consultation process, argues that more information is required about what is under review before it can make a decision on whether or not the changes will be beneficial.
“Our IP laws currently have pros and cons but we just don’t know whether this is a good or bad thing until we see some details,” said John Lovelock, chief executive of Fast.
Despite this lack of information, tech organisations in the East End largely welcome the government’s ambition, but many argue that although a review of IP would be beneficial, it needs to be combined with other legislative reforms.
“The review of the IP framework is terribly important, and we should certainly do whatever it takes to be in the same playing field as the Americans,” said Dominic Wheatley, CEO of specialist software developer SocialGO, and former CEO of gaming giant Eidos.
“However, more work could be done around the tax system,” Wheatley said. “Wealthy investors need an incentive to provide money to startups that interest them, but at 28 per cent, capital gains tax is too high and makes it difficult to compete with our American cousins. If this changes, it will unlock a lot of money that is not being put into tech companies.”
Clive Longbottom, industry analyst at Quocirca, agreed that increasing the incentive for investment is crucial, but believes IP laws should be modified to support it.
“There are worries that intellectual property created in the UK high-tech space may not be as secure as it would be in the US or elsewhere as a result of the current law – and will mean companies and investment go abroad,” said Longbottom.
He also makes the point that to be effective, UK IP law will always be limited by the greater force of EU law. For an overhaul to create a tangible difference, it seems that geographic harmonisation is essential.
“Technical IP laws have to recognise that the world is now a global village, and that laws that apply to the village pub but not to the grocer’s shop or the church are pretty stupid,” he added.
The IP review is expected to report in April 2011 and is being headed by professor Ian Hargreaves of Cardiff University.