WEDNESDAY 13 MAY 1998

PROFESSOR MIKE EDWARDS OBE and DR LESLEY MITCHELL

  280. Do you see that the DERA's dual-use technology centres have been useful in converting defence research for civil use?
  (Dr Mitchell) I think they have a number of examples of successful exploitation. It is not clear to me that if they were viewed in a strictly commercial sense you would say: "It was actually a successful commercial enterprise" because the input is not known. Yes, there are useful products, yes we have got some success, yes, we got some value out of it; whether it was the best way of achieving that value I think is still unknown.

  281. My questions are with respect to intellectual property rights. In your submission to us you are quite critical of the European Patent Office. I think the UK seems to come out okay. What are the particular problems in either one?
  (Professor Edwards) I think neither of us are expert in this particular area. I think there are detailed comments from the Academy members. My own perspective from my company is looking at patenting routes for products which we may launch around the world there are various routes one can take rather than go down the UK route. One can go to the European Patent Office, one can go down the international route. Within Unilever there is a preference always to use the UK's route and the international route, not the European Patent Office. It is worthy of further investigation I think to find out more. The messages that I get are that the European Patent Office is very slow, often taking over four years, it is very expensive and although it is a European Patent Office there are often national variations within Europe that still affect some of the decision making. I think it is a good concept. The experience of people working with it are very concerned indeed that some of the legislation might be prejudicial to some companies wishing to get benefits from the Patent Office. I think it is a detailed technical matter and I cannot give you more detail.

  282. Can you elaborate on this opposition procedure they have?
  (Professor Edwards) No, I cannot.

  283. If you have any background on this. The renewal fees that are payable every year to the Patent Office—I presume this is Britain—are paid to national governments rather than to the Patent Office itself. In your brief this was described as a tax on innovation. In a sense this is money that is generated by the Patent Office and in a sense the proceeds from previous patents, which come via the renewal fees, should be used in a sense to subsidise new applicants but instead of that it is used to build roads in Holland. It just goes into that public expenditure pot, as it were.
  (Professor Edwards) That does not seem right to me. I have no direct evidence. Clearly our Fellows feel very strongly on this and they have the detailed information.
  (Dr Mitchell) We could go back to source.

  Dr Williams: In particular, on the renewal fees, that is the thing that struck me particularly. Does that then mean that patents are 50 per cent more expensive or 20 per cent or double the price? If you could send us a note on that.

  Dr Jones: You did make quite a lot of this in your submission; if you could follow up with that, particularly with suggestions about how things might be improved, where we could learn from other systems.

  284. A final little one as well: is it your impression that patenting is easier in the United States and Japan rather than in Europe?
  (Professor Edwards) We have found the European Patent Office route very costly and very slow.

  285. Is it your impression that is not the case in Japan?
  (Professor Edwards) I do not hear that from the other patenting activities we do on an international basis but again I can try to get some evidence for you on the international comparisons. I will be pleased to do that.

  286. I am just going to confine myself to one question in view of the time. Do you agree that there is a shortage of experienced and talented managers prepared to take on new hi-tech start-up businesses and that this makes it difficult, therefore, for such businesses to attract investment from the venture capital market? If so, what can we do about it?
  (Professor Edwards) That is a very interesting question. It reinforces the comments we tried to make earlier that people are very important, the flow of people, the flow of experienced people of very high calibre are needed to take up some innovation and drive it through. It is not just a question of having technical competence, one has got to have the other competences like awareness of patenting systems, awareness of the marketplace. I am not sure that in our educational system, undergraduate or postgraduate, we turn out people who can do more than pass examinations. We have to give them the entrepreneurial skills, they have to be aware of other things and it does not take long to do that in an undergraduate course. I think we do impress on them too much that all you need to do is to be technically correct and you win. That is almost the university culture and as a university professor I was guilty. Now that I am in companies I realise that there is very much more to actually being technically minded. You have got to (a) tackle the right question and (b) know what to do with the answers. I think there are now some schemes coming through to generate this type of high flier who is technically aware and has the business competences as well. We desperately need more of those to pick up some of the initiatives that we have been talking about.

  287. Let me lob you an easy one about tax incentives.
  (Professor Edwards) Thank you.

  288. Do they encourage investment? Have you any ideas about that, especially for speculative ventures?

How can we get the best out of people and make them think and make it easy? Are there tax incentives that you would push forward?
  (Professor Edwards) Could I say the Academy is preparing a document which is for the DTI and the Treasury on investing in R&D and that will be available in a few weeks' time. That will give a complete Academy view of this area. What I can say at this stage looking at parts of that is that investment in R&D depends on various things; the financial climate of tax incentive being just one of those. There is the access to people, there is the access to the science base. It is that combination of things that determines whether companies will invest, not just the tax incentive. Is there a new university research group that one can tap into? The evidence is that multinational companies, for example in the UK, will expect that package to be as favourable here as it is elsewhere otherwise they will remove their research activity. It is very important for the UK to get its package of attractiveness right but the financial area is just one part of that.

  289. Is EPSRC ahead or behind in the process in comparison with other research councils in your opinion? I am thinking of the MRC, for example, with its exploitative schemes.
  (Professor Edwards) EPSRC I think has some very attractive schemes for a whole range of companies' activities, probably almost too many to be waded through. One of the problems with the scheme the EPSRC has is that there are too many of them and they are not clear, they need some focusing. Then they do have some very attractive schemes where they put their money alongside industrial investment. Unilever takes part in those and presumably other companies as well.
  (Dr Mitchell) In answer to your tax question, I am not a tax lawyer, I do not know about—

  290. We look forward to seeing your document when it is ready. I did say I would give you a few moments if there any points you particularly wanted to make that have not been covered and you will of course be very welcome to put any additional points that you want to in writing.
  (Professor Edwards) I just want to make one point, if I may, and that is engineering does serve a whole range of industrial sectors, including pharmaceutical. To look at the health of engineering research requires examining all those sectors, not just traditional manufacturing. For example, we support the chemical sector, and the pharmaceutical sector, and those are outstanding performers in the UK. Some areas are not so good, it varies very much from sector to sector.

  Dr Jones: Thank you very much, Professor Edwards and Dr Mitchell.