Innovation in Services - Department for Business, Innovation and Skills

The somewhat less intensive use of formal methods of protection by services
begs the questions of how well the system is designed to meet their needs. Wölfl
(2005) argues that some of the familiar barriers to innovation are more of a
problem in service industries:
‘...external effects may be of particular relevance for service firms as
knowledge that is created in the innovation process of services firms is
typically not protected by patent law; it may also diffuse more slowly than
knowledge created in innovation of goods since the IPR regimes used by
services are not based on registration of information pertaining to the
innovation.’ 29
Debate in recent years has considered whether firms ought to be able to patent
‘business methods’. A business method may be simply defined as a method of
doing business (e.g. Amazon’s one click shopping). In Europe, business methods
are not patentable as such, while in the USA business models are patentable.
The Gowers Review 30 considered the case for patenting business methods but
expressed concern that they failed to meet the criteria for patentability; namely
that inventions are non-obvious and novel. The review also raised issues about
business method patents potentially increasing the regulatory burden on SMEs.
Another topic of current debate is the role of the intellectual property rights
(IPR) framework in encouraging/facilitating Open Innovation systems. Open
Innovation systems refer to the fact that increasingly firms make use of both
external and internal knowledge for the development and commercialisation of
their ideas. Open Innovation systems are particularly relevant for knowledge
intensive services (e.g. consultancies). Salter and Tether (2006) 31 note that
professional service firms often act as brokers, spanning different structural
roles in order to bring knowledge and ideas from one place to another. Open
Innovation models need a flexible and transparent framework for licensing, as
well as buying and selling IPRs.
1.4 UK innovation policy and services
The UK’s approach to innovation policy is set out in the 2003 Innovation Report, 32
which identifies seven success factors for the UK’s overall innovation
performance:
● Sources of new technological knowledge;
● The capacity to absorb and exploit knowledge;
● Access to finance;
● Competition;
29 Op cit.
30 Gowers (2006) ‘Gowers Review of Intellectual Property’.
31 Op cit.
32 DTI (2003) ‘Competing in the Global Economy – The Innovation Challenge’, DTI Innovation Report.
Introduction
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