Our guest blog on 24 August by Simon Gentry attracted a long and reasoned response from Queen Mary IP Research Institute's John Cahir. John's comments have in turn inspired a riposte from Joff Wild, editor of IAM and a seasoned commentator on the impact of IP rights on the economy. Joff writes as follows:
I have just got back from my summer break and have been catching up with the last few weeks of the IP Kat. As usual, there is a lot of very interesting information and comment. One item in particular caught my eye - Simon Gentry's guest blog on the state of IP in Europe and the response to it from John Cahir of the Queen Mary IP Research Institute.

To be honest, I was very surprised by what John had to say. He downplays the role intellectual property and intellectual property legislation can have in shaping economic development and, in the case of the US, seems to say that the primary drivers of that country's extraordinary technological dominance over Europe in so many spheres is not related to IP very much at all. I think he is wrong and I believe that if he were to ask industry and university leaders in the US they would disagree with him as well.

Much of the US's leadership in areas such as biotechnology, telecoms, software and other high-tech sectors centres on hugely successful collaborations between the private sector and the university sector. These collaborations only became possible following the passing of the Bayh-Dole Act at the beginning of 1981. Bayh-Dole was a purely IP-driven piece of legislation that for the first time enabled the private, finance and academic sectors to work together in a mutually beneficial way to develop patented technology developed in US universities and to build companies that now employ millions of Americans (as well as citizens of countries across the world) and generate hundreds of billions of dollars in revenue each year. It is also worth pointing out that it came into force at a time when the US economy was in serious decline and many doubted the US's ability to compete with countries such as Japan and Germany. Bayh-Dole was recently described by the Economist as the single most important piece of US legislation of the last 50 years. Referring to Bayh-Dole, George Rathmann, the founder of Amgen, said in June 2001: "I have no doubt that there would be no biotech industry today without our patent system."

Just a year after Bayh-Dole, the Court of Appeal for the Federal Circuit (CAFC) was created. This centralised the appeals process in US patent cases and provided much more certainty for patentees. It took much of the randomness out of patent litigation in the US and so gave companies greater confidence to invest money in R&D, to apply for patents and to enforce them if they were infringed. After all, there is little point in pumping huge sums into developing a product if, the moment it comes on to the market or even before, the competition can rip it off without worrying too much about the legal repercussions.

On top of Bayh-Dole and the CAFC, there is the role of the Commissioner of the USPTO. Men such as Bruce Lehman and Todd Dickinson have shown just how significant the post holder can be in shaping IP policy in the US to the benefit of IP owners. Significantly, the USPTO Commissioner is a direct presidential appointee with wide ranging powers not only to effect swift changes to examination regulations when needed (as has been the case over the last 10 years in areas such as, for example, biotech and business method patents) but also to represent US IP interests internationally. In the legislature too, high profile Senators and Congressional representatives make it their business to be well informed about IP. All this is in direct contrast to the state of affairs in Europe, where it has taken 25 years and counting to introduce a Community patent; where it can take two years to introduce fee changes at the EPO and where the head of the EPO is chosen following protracted horse trading between member states of the EPC based not so much on the ability of nominees to do the job but on whether they come from the right country and speak the right languages.

None of this means that the US has it all right. There are many legitimate debates to be had over, for example, patentability criteria in areas such as software; the cost of litigation; and the US's international IP agenda. In addition, the US is one country while Europe is a collection of countries. However, I do not believe it is credible to say that IP has not been a central factor in the huge growth the US economy has enjoyed over the last 20 years. John does Europe and its companies no favours in ignoring IP's impact but, unfortunately, he is one of many on this side of the Atlantic. Whereas the US has spawned the LES, AUTM, the AIPLA, the INTA, the IPO and countless other high profile organisations representing the views and aspirations of IP owners, Europe has produced very few. It means that influencing the decision making process in Brussels and in national capitals is much more difficult. And if IP owners are not helping to shape the debate, those with an anti-IP agenda will instead - just have they have been doing so successfully over recent years. And it is not only in areas such as biotech and software that this is happening: recently 150 out of 450 MEPs voted against a heavily watered-down Enforcement Directive, a piece of legislation that was of major importance to both trademark and copyright owners.

I am not an IP lawyer or an academic - I do not know the ins and outs of every court decision or piece of legislation that is issued in Europe each year. But what I have learned over the last few years of writing about IP is that patents, trademarks and copyrights are fundamental to the success of companies wherever in the world they are based. I know that the US has done more than any other country in the world to protect the IP interests of its companies and universities, and to foster the development and exploitation of IP rights. I also know that globally the US has had by far the most dynamic economy for the last 20 years. I am pretty sure that this is not a coincidence.

John is right to say that people do not begin companies because patent protection does or does not exist in a certain field. However, very few companies based on an innovative technology can prosper and grow without IP protection. It is not just Americans working at big US universities, in Silion Valley start-ups and in major US corporations - there are many thousands of entrepreneurial and commercially-minded Europeans working in them too: Europeans who could be starting businesses here, so employing other Europeans and contributing tax money to European exchequers. But they are in the US because it is that country which as done all it can to attract them by providing the infrastructure which gives them the best chance of succeeding. It is an infrastructure that has intellectual property at its very heart. And until IP owners in Europe begin to get across that message to policy makers here, they are going to be operating at a serious disadvantage when taking on their American competition. I am afraid that complacency is not really an option.
The IPKat has no intention of taking sides in this debate --- yet. But he does feel that one of the biggest advantages that the US has over Europe is its self-confidence and belief that it can and will achieve; a ssecond advantage is in its presentational and marketing skills; a third is in its relative freedom from clogging bureaucracy. These factors would enable the US to retain its edge over Europe even if we adopted Bayh-Dole and a patent office system akin to that of the US.

This debate is not closed. Please keep sending, or posting, your comments.


  1. Jeff,

    Thank you for your thoughtful reply to my comment.

    In response, let me begin by saying that I agree with an awful lot of what you say. I think therefore that I should begin by clarifying my views on the EU's IP agenda.

    The problem with the EU's IP policy is that it is excessively focussed on creating unneccessary and economically unjustified IP rights, rather than on improving the mechanics of existing ones. Consider three recent pieces of IP legislation: the Database Directive, the Artist's Resale Right Directive and the Design Directive. Each of these I would suggest is at best economically irrelevant, and at worst positively damaging for creativity/innovation in Europe. Yet each has consumed large amounts of legislative time and sapped 'goodwill' for IP. At present the EU is squandering negotiating muscle in trade talks by pushing forward the barely disguised protectionist agenda of Geographical Indications.

    So the EU is very successful at promulgating new and unneccessary IPRs. On the other hand, when it comes to really important issues - commercialisation of research, technology transfer block exemptions, establishment of a single European patent - it either fails, or burdens industry with unnecessary regulation. This is, as you point out, where the contrast with the US is most apparent.

    Finally, I return to the more abstract issue of whether IPRs are a critical factor towards achieving economic success. This remains an issue about which economist theorists are divided. No-one disputes that IPRs create incentives for research, which ultimately drives progress in knowledge based economies. On the other hand, IPRs do impose a dead weight loss on consumers, and can hinder further innovation, thus lowering overall economic welfare. Accordingly, it is important for policy makers to ensure that checks and balances are built into the IPR system (e.g. exceptions for experimental research). I was therefore somewhat bemused by Simon's rather romantic extolling of IPRs - it is not as simple a picture as he was painting.

    My simple point is that MORE IP rights is not necessarily a good thing. Unfortunately, this is where the EU has expended a lot of its energies. However, I wholeheartedly agree with you that establishing more efficient, commercially attuned mechanisms for exploitation (necessary) IP rights is where action is requiried.


    John Cahir

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