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Britain's CBI Unveils Plan To Boost IP

by Robin Pilgrim, LawandTax-News, London

21 September 2009

The Confederation of British Industry (CBI) has unveiled a six-point plan to help underpin the UK’s reputation as a world leader in developing and exploiting intellectual property (IP), including a serious re-think of the current tax system. CBI President Helen Alexander said IP should be the crown jewel in UK economic recovery.

All government policies should pass the test of whether they make Britain a more attractive place for innovative businesses to invest in, develop and exploit their ideas, says the CBI. The business group also wants the research and development (R&D) tax credit to be extended, and serious consideration to be given to introducing a "royalty box" system. This kind of system, used in some countries such as Belgium, means that revenues from certain areas of IP, such as drug patents, are taxed at a lower rate. This would encourage R&D in the UK by both foreign and domestic companies.

Speaking at the CBI’s East of England annual dinner at AirSpace in Duxford in Cambridge recently, Alexander said the development and exploitation of IP would play an important role in the UK’s economic recovery.

“We must have a stable and competitive tax framework if we’re to incentivize IP development and exploitation. Change and uncertainty undermine the confidence of those making long-term investment decisions."

“We currently have a strong R&D tax credit scheme. But other countries are fast catching up, and are becoming more innovative in how they set tax structures to encourage IP development.

“The US has recently decided that its R&D tax credit is such an important part of its business landscape that it will make the credit permanent. Competing with the US is never easy, and so any plans to remove the UK’s R&D tax credit should be rejected out of hand as dangerously short-sighted.”

The CBI’s six proposals to ensure the UK is a world-leader in IP are:

  • The Intellectual Property Office (IPO) should have a single, clear mission to act as a “champion for IP-intensive companies" across government. UK Trade & Investment and the IPO should collaborate to provide a one-stop-shop for any prospective foreign investor in IP-intensive industries.
  • The IP architecture for patents, copyright, designs and trademarks must be “fit for purpose” for all businesses in the global economy. This will require specific actions such as the introduction of a community patent within the European Union. More broadly, the government should promote the importance of IP to the UK public and highlight the important role that IP plays in enterprise, creativity and innovation.
  • All relevant future tax changes should have to pass the test of “Will it make the UK a more attractive place for IP-intensive businesses to invest in, develop and exploit IP?” The government should also give serious consideration to a “royalty box” approach to encourage companies to register their IP in the UK and further enhance the R&D tax credit scheme to encourage more R&D in the UK.
  • The quality and quantity of graduates, particularly with STEM (science, technology, engineering and mathematics) skills, must be increased as a matter of urgency, through opting in high ability students to take all three sciences at GCSE and encouraging a greater uptake of STEM subjects at A-Level. The government should also invest in laboratories in schools and encourage more work experience for young people to ensure they are enthused about and better prepared for careers in IP-intensive industries. The government should take more steps to improve collaboration between universities and business. The IPO should continue to market Lambert model contracts for sharing IP in business/university projects to help encourage research, and working with business should be included as a criterion for academic promotion.
  • Government at all levels should support the development of research clusters by maximizing local strengths and avoid creating disincentives for investment.
  • The government must take action to ensure a supply of venture capital funding to IP intensive start-up companies. It should also establish a mechanism such as a new Industrial and Commercial Financial Corporation to provide development finance for IP-intensive businesses in the UK for the future health of the economy.

More details will feature in a new CBI report to be launched later this month, titled “Ripe for success: making the UK the place to develop and exploit IP."

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