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Understanding IP: Design & Economic Growth

Understanding IP: Design & Economic Growth

11th May 2011

Chair: Mike Weatherley MP

 

Speakers: Chi Onwurah MP, Shadow Minister for Business, Innovation and Skills; Dids Macdonald, Anti-Copying in Design; Dr Paul Leonard, Billings Jackson Design; Sebastian Conran, Sebastian Conran Associates; Professor Jeremy Phillips, Journal of Intellectual Property Law and Practice; Dr James Moultrie, University of Cambridge 

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‘Creative pioneers are among the champions of the UK economy and they deserve to be protected.’

 

Design right is like copyright in that the protection arises automatically when the design is created. The majority of design businesses are SMEs, and, like most of the UK’s other SMEs, tend to rely solely on these unregistered rights for protection of their IP.

Registering designs is possible, but often impractical because of the sheer number of designs a business might need to register and the cost involved.

The grievances of the design sector arise from the fact that there is a lack of parity between unregistered design rights and other forms of unregistered rights (such as copyright), in terms of the sanctions for IP infringement, or copying. There is no clear reason why this is the case. 

Whilst UK businesses invest a huge amount in design annually (£23bn, the greatest of all the intangible asset totals) the design IP protection regime is the most shambolic, and difficult to enforce.  

Consequently, poor behaviour – copying of designs – amongst some of the larger retailers is rife, as there is little risk of redress from the smaller suppliers whose ideas they steal. 

The purpose of the seminar on the 11th May was to debate, in a Parliamentary context:

  • the importance of design rights in relation to the operation and success of British industry

  • the position of design rights in relation to other forms of IP

  • the barriers that currently stand in the way of businesses (and particularly SMEs) maximizing the benefits of design IP

  • any potential solutions that policymakers might be able to effect

 

Mike Weatherley MP, Hove (discussion chair)

Mike has experience of managing and promoting IP throughout his pre-Parliamentary career in the music and film industry (as Head of Europe for a film licensing company). He expressed a fiercely-held belief in the importance of protecting intellectual property, and since joining Parliament has been championing the issue of IP protection within the House. Believing that too few MPs understand IP, he launched a competition, ‘Rock the House’, encouraging MPs to enter a local band into a national competition. The goal is to highlight the importance of respecting and encouraging young, creative talent in Britain. It has thus far been a phenomenal success, with 70 MPs involved. He is also the director of a fashion trust, and his maiden speech focused on supporting the creative industries in Hove. He lamented the fact that the Hargreaves IP Review looked likely to suggest a move towards a more relaxed IP system.

 

Chi Onwurah MP, Shadow Minister for Innovation and Science

Chi expressed a belief in the importance of protecting IP to promote growth, recognising it is an extraordinarily complex and wide-ranging matter, and an essential part of incentivizing innovation. As a participant in the discussion, and someone well-placed to critique the government on their IP policy, she said she was seeking views on protecting design rights in a growing economy.

‘Ensuring the appropriate rewards accrue to innovators’ is crucial in the context of a country seeking to grow its recovering economy. And it is generally believed (as some forthcoming OECD research will prove) that Growth will come from small innovative companies, and innovation is a necessary (although not sufficient) condition for growth.

However there has long been a debate over the appropriate extent and quality of IP protection. So she asked, ‘what level of protection will enable small businesses to function, innovate, grow, reap the rewards of innovative design, without posing a barrier to a generally competitive market?’

 

Dids Macdonald, Chief Executive, Anti-Copying in Design

Dids Macdonald founded ACID on the back of personal experience as a designer whose business suffered from IP infringement – from having her designs stolen. She set out some of the challenges for design businesses, describing a ‘paucity of IP options’ for manufacturers and designers who are wronged: usually it is not about fairness, but about who can pay to enforce infringement. 

She claimed that design’s significant contribution to GDP is rarely acknowledged in policy or in the ‘plethora of IP reviews to date’. Design is an ‘unsung hero’, despite the fact that UK businesses spend significant amounts on it.

All design disciplines are underpinned by intangible rights. Most businesses rely on unregistered rights, creating at a prolific rate but not registering their designs. The industry is comprised of thousands of microbusinesses, for whom the huge cost of taking action is prohibitive. Many go out of business because they can’t fight their corner. And if they don’t, fighting infringement takes focus away from core business focus: designing and manufacturing British products.

Design right should be on a par with other property rights – such as copyright and unregistered trademarks. Copying should be considered a crime, as copyright infringement would be: they are the same ‘species of rights’. But the sanctions are different. 

This leads to widespread poor practice. Ideas are stolen from pitches, or from trade fairs, the point of entry to the market for most businesses. Unlike their EU counterparts, exhibition organizers in the UK don’t take a tough stance on IP infringement. 

She concluded by saying, ‘there is a need for IP policy that walks the walk, not talks the talk, with a real cost- and time- effective enforcement framework.’ Dissuasive damages are needed to act as a real deterrent. 

 

Professor Jeremy Phillips, Journal of Intellectual Property Law and Practice

Professor Phillips conducted a whistlestop tour through the history of design IP: design protection was in fact a great British invention, coming in at the time of the Great Exhibition in response to the discovery that there was no mechanism for protecting most of the things on display.  A gap in legislation became apparent, for protecting manufactured goods that were neither inventions nor fine art, but something in between.

Now, there is far too much conflicting protection, resulting in ‘an impenetrable web of laws’. This is incredibly confusing for both the legal minds who are meant to advise, and the business seeking to protect their products. Designs may be protected under a plethora of different ‘design rights’ (‘UK registered design’, ‘unregistered’ design protection, ‘community registered design’ for which there are different criteria, ‘unregistered’ community design). But there is often no easy way of searching for designs that might already exist and be protected under these. 

Designs can also be protected by trade mark: ‘as more and more people realise design right is short-lived, they try to get designs registered as trade marks.’ (Community and UK)

Artistic copyright is yet another possible form of protection.

Unsurprisingly, as most even intellectual property lawyers who specialise in design work spend no more than 10% of their time on design law, IP lawyers are often not up to date, relying on outdated copies of the Registered Designs Act 1949.

He argued that radical reform (‘surgery’) on IP law was needed, to provide a system that lawyers can understand and have confidence in applying, that students can be taught, and that businesses can use.

 

Dr Paul Leonard, Business Director, Billings Jackson Design

Billings Jackson are industrial designers who operate in the space between architecture and manufacturing. Examples of their current work include the design of the line-wide components for Crossrail and the new check-in desks at Heathrow Terminal 2 in London, and the redevelopment of Times Square and Hudson Square in New York. There are over 3,500 pieces of street furniture designed by the firm in Manhattan.

To illustrate the kind of IP the firm generates, Dr Leonard gave the example of a temporary bus station the firm had designed in Bilbao. The structure was designed in such a way that it could not just be easily dismantled, but could also be reassembled to provide the city with 300 new bus shelters when the permanent bus station was erected. The firm had, therefore, not just generated IP in the form and function of the bus station, but also in the novel, strategic approach it had taken which had evidently added value. Such IP was not as easily copied and exploited by third parties as that generated by product designers in the retail sector.

The overriding issue for industrial designers like Billings Jackson was that the kind of value that their services can deliver was not always recognised. Industrial design was too often regarded as an additional cost to major infrastructure projects, rather than an investment to add value and efficiency; a notion reinforced by cost-based procurement methods, especially in the UK. IP rights for industrial design were not very well respected or understood in the construction sector. Dr Leonard said that IP was about managing and exploiting investment in innovation: until industrial design was regarded as an investment, rather than a cost, it was unlikely that this situation would improve.

 

Sebastian Conran, Sebastian Conran Associates

Sebastian Conran noted that there are fashions in the design of all consumer goods, and designers cannot lead without people following. However, the line between inspiration, influence and plagiarism is fairly nebulous and they need to be formally clarified with a formal protocol of unfair competition that businesses will be expected to adhere to.Sebastian highlighted a particular example – of a child’s drinking cup – to demonstrate the difficulty of enforcing IP protection for designs. The design itself cost around £8000 to generate and soon became a world-wide bestseller. It was well-protected, by registered design, patent, trademark, and copyright. And yet when a large retail supplier who stocked the product, tried to take the design and have it manufactured, it cost the inventor and owner of the IP in the region of £300,000 to stop the infringement.This situation – the corporate bullying, the lack of clarity and the difficulty of enforcing, even in cases where the ownership is clear and proven – makes the UK a relatively unattractive place to manufacture and invest compared to say Germany. He suggested that the government redesign an IP system that was simple to use, clear, and cheap to enforce.

 

Dr James Moultrie, Senior Lecturer in Design Management, Institute for Manufacturing, University of Cambridge

Dr Moultrie presented the results of a piece of research he has undertaken for the IPO (who have a number of design-themed projects running at present) and the Design Council, examining how small businesses understand and use design rights. The survey interviewed approximately 40 businesses in total, and the published results are imminent.

He said that the responses suggested that many businesses – both design businesses and technology-based businesses – recognized the importance of design to their business. But very few, by contrast, actively protected their design rights through registering, and even fewer registered designs at an international level.

He also said that design agencies were unlikely to consider themselves as advisors to clients on the matter of design IP, but perhaps they should.

 

In the discussion after speaker presentations, the following points were made:

  • In looking for regimes that are better than the UK’s, Germany stands as a good example. Both for having a much clearer system, and for the greater respect which design is afforded in general. 

  • There were extreme examples from the floor, for example, of an instance of a client coming to a designer asking him to ‘knock off’ one of his own designs.

  • The situation does affect how people perceive the UK as a place to trade – there was an example of Danish and Dutch companies deciding not to return to UK trade fairs because of lack of clampdown on IP infringement.

  • It was suggested that, just as important as sanctions that worked, was the engendering of a certain morality about design copying, lacking at present. Ripping off designs is considered a matter of course – an occupational hazard that designers just have to accept.

  • This would entail retailers and others being made to declare their position in relation to respecting the IP of their suppliers. Those who copy should be made to feel ashamed, or afraid of being ‘outed’.

  • Principles of respect for IP ought to be a matter of CSR

  • The issues of sanctions and behaviour are related, but there is clearly also a question of culture change around respect for design and wrongness of copying.

  • The inconsistency of government policy was described as problematic – having had a series of not very effective IP Ministers. This is in clear contrast to the US, where Obama has stated IP protection as a national priority, appointed an IP Tsar to enforce it.