Europe's industrialised view of IP is undermining the creation of a knowledge-based economy, say Bowman J Heiden and Ulf Petrusson from Gothenburg's center for IP studies

 Europe set out its aims to ‘become the most competitive and the most dynamic knowledge-based economy in the world’ by 2010 in its Lisbon Agenda. Yet, here we are in 2007 with considerable ground to cover. Our view of IP is still tied to an industrialised concept of property, in that we are conditioned to view IP as a negative or defensive right. In Europe, at least, the majority of our discussions still centre on the use of IP Rights to protect or block others from producing physical products, rather than how they can be used to encourage the transfer of knowledge.
 
We have become experts in the administration of  IP (the filing for IP Rights) and the judicial arena (the dispute of IP Rights). But while important, this regulatory focus does not encourage the management of IP as a commercial object of trade and as trusted financial security in the capital markets across Europe. By holding steadfast to a defensive view of IP Rights, we are actually undermining businesses’ attempts to leverage intangible assets, such as inventions, designs and trademarks in a commercial and financial context.

IP through industrial eyes
Of course, it stands to reason that we should be captured in an industrial model; we have spent the last 200 years perfecting the art of creating wealth from the material value chain. This has led to a system for the efficient allocation of resources for the creation of value through the excavation of raw materials and production, distribution and retailing of physical products. Our financial institutions, accounting systems, corporate governance models, legal norms and institutions of higher learning have also evolved to support the creation of assets, property and capital within this value chain.

Business leaders and policymakers need to work together to develop a pan-EU system for the trade and capitalisation of IP

However, in order to transform from a traditional industrial to a knowledge-based system, it is essential that the focus on IP shifts from the administrative and judicial arenas to the business arena. When IP is viewed broadly as business assets – packaged as value propositions for commercial transactions instead of narrowly defined as legal rights – then it becomes rather obvious to start managing IP as core business. Viewed from a business perspective, IP is no longer restricted to the role of blocking others, but instead can be used as building blocks to create innovations, markets and ventures in a proactive manner. In this context, business managers must build capabilities in IP management as part of their core business and not leave these issues to be handled solely by the IP or legal department.

But, this shift in the use of IP also has to be supported by changes to the IP system at a higher level. Europe benefits from the free movement of physical property, yet IP is unable to transcend the same borders. Part of this can be explained by language and legislative barriers; we measure knowledge through legal constructions, which in turn are supported by the language we use to describe them. Given that both language and legislation vary by jurisdiction in the EU, simply crossing the different borders of the member states invariably alters the value, if not existence, of IP and other forms of intellectual assets. What it doesn’t explain, however, is our apparent reticence to solve the problem. Rather than working to eliminate these limitations or to unify our use of IP in a broad business sense, we are squabbling over the language used in patent applications, instead of seeing the community patent as an important step to a broader strategic use of IP in business and finance across the EU.

Supporting knowledge
Our lack of ability to move forward only hinders Europe’s attempts to become a world-class knowledge-based economy. Business leaders and policymakers need to put fruitless discussions aside to work together to develop a pan-EU system for the trade and capitalisation of IP, overcoming not just our industrialised view of innovation, but also the language and policy barriers that hold back broader IP reform. If we are not able to do that, then we should accept now that we will be, at best, the fifth or sixth ranked knowledge-based economy in the world, despite the aims of the Lisbon Agenda.


This article first appeared in IP Review, issue 19

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