The system's fine, but where's the money?

Much loved by innovative SMEs:
the Loan Arranger

In a thoughtful and much-commented piece hosted by the IPKat on Friday ("Pioneers, Pirates and Parvenus – IP v Innovation", here), Gwilym Roberts -- who attended one of the Hargreaves Review meetings last week -- made some valuable observations about the "problem" of the IP system being not so much the system itself but the failure of funding to back innovative projects. To this, Mary Ellen Field adds some highly pertinent comments of her own:

"It is very sad that there was little input from SMEs at the meeting last week, but not at all surprising. SMEs are trying to keep their heads above water when the banks won't lend and they are often fighting off attacks on their IP from counterfeiters and larger well funded companies with clever aggressive lawyers. They are in my opinion effectively excluded from the Hargreaves report by virtue of the makeup of the panel and the language used. It might also be because they think IP Law in the UK is fine and that they don't have the time nor the money to navel-gaze

I tried very hard to be allowed to attend that session this week and I believe I had a lot to offer. I am not a lawyer or an academic but I have been successfully managing, protecting and exploiting my clients' IP from a commercial perspective for thirty years, working with lawyers throughout the world. I wrote to my MP, to the IPO and to Prof Hargreaves himself but had no luck despite my MP writing to Baroness Wilcox on my behalf [The IPKat would love to see more involvement from MPs in general -- the All Party Parliamentary IP Group seems to have gone to ground again -- and from the IP Minister Baroness Wilcox]. I have finally managed to get a slot on Monday afternoon [today!] at the IP Review Surgery Event

The fact is that SMEs are not usually populated by lawyers and academics, the wording in the review document suggests that unless you are a lawyer or an academic, your opinions count for nothing. Professor Hargreaves states that the submissions must be "evidential", this word alone would put any hard working SME off. Perhaps as an academic Professor Hargreaves does not want case studies from SMEs who may well be able to shed great light on this issue. Perhaps SMEs are intimidated by the language of the Review document. Surely if the government or the panel wanted to know the problems facing innovators, they would have put an innovator on the panel. At least he or she would have spoken the same language as the SMEs, also I don't think there are any women on the panel

There are three major problems facing innovative individuals and SMEs in the UK and IP framework is not one of them.

1. The lack of people willing to invest in startups. Our banks won't consider lending to you and the turnover you need to attract Private Equity investors grows each year. Added to this is the fact that investors in this country usually require 100% security over the innovator's IP, and too often the founder finds himself removed from his creation if things don't move as fast as the investors require. As the banks have done away with the concept of bank managers who took it upon themselves to understand their client's business, there is no one to talk to at our banks who knows what you are talking about. If you doubt me, trying explaining the concept of a royalty stream to your local Barclays business branch [The IPKat entirely endorses this. He has been hearing it from small innovative businesses since the 1980s].

2. The catastrophic consequences of financial failure in the UK. Our laws relating to financial failure are so draconian that a failure when young can prevent you ever being able to raise funds in the future and even if you manage to start up again and be successful, whenever you are mentioned in the media no matter how successful you are even decades later you will be referred to as "Bill Smith the former bankrupt" In the United States failure is regarded as a part of the learning curve unless you have intentionally defrauded people. That is seen as capitalism in action [Strange how, at the bottom level, banks are so reluctant to take even the smallest of risks, while they seem to throw caution to the winds when it comes to buying subprime mortgage portfolios and investing in financial paper of which they have manifestly little understanding]

3. Predatory behaviour by larger British firms, particularly retailers with very scary lawyers. The costs to an SME to take on a large company that the SME believes has infringed his IP rights are simply out of the question for most SMEs. It is possible of course to arrange IP litigation insurance but that requires an opinion from counsel before the insurance company will commit. The cost of this can be prohibitive to a small company or individual. Even if you can force the big company to back down enforcement can become a full time job [If evidence is needed here, Hargreaves can speak to ACID, which can provide some real examples]

Perhaps it is because I am Australian but I get extremely annoyed when the British do whatever the Americans tell them to do. It drives me nuts. Who cares what Google wants? They don't care about innovation in the UK, they just want it made easier for them to make money here. This UK has never been short of innovators and it isn't now, it's just extremely bad at supporting its innovators, forcing many to move abroad or giving up their innovations for next to nothing because it's not polite to fight back. I have several innovative British SMEs as clients, they export throughout the world they use the Internet as an integral part of their businesses. Sadly most of them could not raise funds here and have raised them abroad from foreign investors who take a long term view".

The IPKat applauds not just the message but the manner of its delivery.  Members of the Hargreaves Review, please take note!