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Can British-owned intellectual property enlighten the British economy?

Updated Tuesday, 28th June 2011

Leslie Budd looks at how the UK economy pays its way in the global economy by exploiting intellectual property (IP).

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The myth that Britain doesn’t make anything anymore was exploded in the first episode of the BBC/OU television series Made in Britain. The challenge for the UK economy in ‘paying its way’ in the global economy  is how to exploit intellectual property (IP) in order to sell it to the rest of the world. Part of that IP is marketing and branding, which contrary to popular opinion, has a long history.

One of the earliest examples is Sunlight Soap, that was produced by Lever Brothers in 1884. It was one of the first cleaning products that were cut, wrapped and branded individually. It also became one of the first internationally branded products aimed at consumers, who formerly used home-made soap. The brand lives on internationally, but has not become the generic term for products, for example Hoover (for vacuum cleaners), Xerox (for photocopiers) and Kodak (for mass market cameras).

The Department for Business, Innovation and Skills (BIS) states that the UK exported £150.6 bn of services, with the high IP content, in 2010. According to the Confederation of British Industry (CBI), the role of IP in promoting international competition and economic growth is vital.  Trademarks account for an annual £18bn worth of exports. The UK music industry accounts for 20 per cent of world exports of all digital products. The two industries most reliant on patents, aerospace and pharmaceuticals, had respective turnovers of £20bn and £17bn in 2010, both of which are export-intensive industries.

Crystal Palace train station Creative commons image Icon By Ewan-M via Flickr under Creative Commons license. under Creative-Commons license

This information reinforces the growing importance of trade in IP, but there is a potential downside that the example of Pilkington Glass amply demonstrated. Its revolutionary Float Glass Process is one of the significant developments of the 20th century and became commonly known as the Pilkington process. The process was invented in the mid 1950s. This form of toughened and laminated glass revolutionised the building and automobile industries, and in the former case allowed larger and larger window plates to be used as cladding for modern buildings (the picture above is the entrance to the Crystal Palace Railway station in London).

Its dominance of the global glass market led it into conflict with the US competition authorities during the 1990s, due to issues surrounding US-based licenses of its technology. Despite this dominant position, Pilkington was taken over by the Japanese glass maker NSG in 2005.

You do not have to be an economic nationalist to express concern over the foreign ownership of British IP. The structure, conduct and performance of industries and firms are the key strategic variables and not just ownership. The strategic issue is whether the research and development base of IP migrates to the home base or other locales of foreign companies. This was the case in point when the automobile manufacturer SAIC used the IP of Rover to open up production in China. There are contrary examples, including Ford’s and Tata’s ownership of Land Rover and Jaguar cars. The issue is whether the IP base and export potential remains in the UK and makes its significant contribution to re-balancing the British economy. In the case of Sunlight Soap the brands rights are now American owned and no longer washes away the worries of the population of the UK. The challenge for the UK economy is whether its IP (including famous brands) thrive on the sunny uplands of the global economy. Or will it fade in the shade of the lowlands, due to not being able to match international competition.

What is your story about British IP and the challenge of developing and sustaining IP in the UK? Join the debate in the comments section at the foot of the page.

Leslie was writing in response to the second episode of Made in Britain, a BBC/Open University co-production exploring manufacturing's role in the UK today.

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