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Kay Withers, Research Fellow at IPPR, explores the challenge for policy makers in UK on how best to address the critical intellectual property rights (IPR) issue as Britain continues evolving towards a more knowledge based economy.

This week the UK Government called for evidence on the state of the country’s intellectual property framework. The Gowers Review comes at a time when conflicts over the use of creative content emerge almost daily. Google has faced the wrath of publishers the world over for providing too much access to commercial content, while content companies continue in their various attempts to stall illegal downloading of music and video content.

Meanwhile, no speech on the state of the UK economy can go by without a reference to the possibility that, in the future, over half of the world’s manufactured exports will come from developing countries. With India and China emerging as strong economic powers with huge manufacturing potential, UK policy makers have turned to the commercial potential of the intangible: the latest idea, innovation or creative work that can sustain the country's economic growth.

As we move towards an age of true media convergence, one in which all kinds of information and creative goods can be replicated and shared at zero marginal cost, it becomes increasingly urgent, and increasingly difficult, to provide an intellectual property regime that rewards innovators, protects information assets, and provides incentives for further innovation.

The pressures and expectations placed on the current regime are immense. The creative industries currently contribute 8 per cent of gross value added to the economy. While the UK is experiencing a net deficit of international trade in physical goods, services and information goods continue to turn a net profit. Witnessing this trend, governments across the developed world have sought to extend protections offered by intellectual property rights.

At first glance this might seem sensible: the UK's creative assets are important to the economy and extending intellectual property terms will make existing work more valuable. But this treats information and creative goods as physical property, and ignores the conflict at the heart of the intellectual property regime.

For the economy to grow we need a continuing influx of new ideas, of new innovations, and new creators. As well as incentives to create, new innovators and creators require access to information and knowledge and to the outcomes of previous scientific and creative endeavour. They need to be able to build on these to achieve new heights in discovery and creation. In short, we need both access and protection. We should only extend or strengthen rights once both of the demands of the intellectual property regime have been adequately considered.

Identifying the benefits of a longer term protection is relatively easy. It will have a positive impact on the value of existing, successful creations and innovation. As far as copyright is concerned, those goods have already stood the test of time: the Beatles, the Rolling Stones, and Elvis for example. A longer patent monopoly will provide more opportunity for securing return on investment in research and development for those innovations which still have commercial worth at the end of their current 20 year limit.

But out of the millions of creative works produced in the last century, the Beatles and the Stones represent a small minority. The majority of works do not retain their value over the length of protection: of the 10,027 books published in 1930 only 174 were still in print in 2001. Patent renewal figures indicate a similar story for patents: there are a number of inventions which remain valuable for many years after first discovery, but there are also plenty which do not.

The majority of evidence shows that extension of term has no impact on the strength of incentive intellectual property protections provide. When Parliamentarians debated extending the length of copyright term to life of the author plus 60 years in 1841, they recognised the absurdity of conceiving that artists and creators make decisions on whether to create based on whether the length of protection is life plus 50, or life plus 70 years. The majority of creative artists are struggling to make a living now, rather than considering the financial worth of their creations some decades into the future. So the future is no more secured if we offer protection at the level of the status quo, or increase it to forever and a day.

One of the major challenges to getting the intellectual property balance right is the fact that many of the benefits, and impacts, are difficult to quantify. Measuring the economic value of openness and the societal impact of stronger IP rights is notoriously hard. We can see the contributions made by creative industries and innovating companies in terms of jobs, gross value added and tax revenue. In contrast the benefits of sharing, openness and the public domain are not always experienced directly.

Content in the public domain can stimulate economic activity: the absence of copyright for weather data in the US has allowed a 3 trillion dollar market to grow, expiration of copyright in literary classics has meant publishers can compete to supply copies of well-loved books to consumers at lower prices and greater value for money. But the impact of ‘free’ suppliers of information and knowledge – libraries and universities for example – on the wider economy is less well known.

The Government is faced with something of a conundrum. In the intellectual property regime, balance is key. But we need to balance two very different things: one, tangible and quantifiable, the other intangible. Given this difficulty, the impetus should be on those who propose changes to the regime to prove they are necessary. Those in favour of lengthening terms of intellectual property protection have yet to make a strong economic case that it is necessary. If the future prosperity of our economy depends on it, then we should be able to present clear evidence detailing how. So far, this has not appeared.