The Memorandum of Understanding

The Intellectual Property Office (IPO) entered into a Memorandum of Understanding (MoU) with the Office of Fair Trading (OFT) published on 12 July 2012. This MoU formalises the pre-existing unofficial relationship between the two bodies and is recognition of the complimentary, and sometimes conflicting, interaction between them. 

The key features of the MoU include: a) procedures for the IPO to refer cases to the OFT where it considers that there may be competition concerns; b) sharing of knowledge, expertise and best practice in areas of mutual interest; c) sharing of information, where appropriate and as permitted by law; and d) technical and policy assistance on projects of mutual interest where appropriate and permitted by law. 

The IPO and the OFT will monitor the operation of the MoU to ensure that there is effective cooperation and constructive communication between them with OFT and IPO officials meeting at least quarterly to discuss matters of mutual interest under the memorandum. 

The OFT will give due consideration to any referrals and respond to the IPO stating what action, if any, it proposes to take. This has to accord with the OFT’s prioritisation principles which principally feature impact on consumers and the work’s strategic significance. 

Hargreaves recommendation

The Hargreaves review of the UK intellectual property system was published in May 2011.  The Government agreed with Hargreaves recommendation for mechanisms to allow for the effective management of issues where IP and competition issues intersect. Recommendation 10 of the Hargreaves Review specifically stated: 

The IPO should be given the necessary powers and mandate in law to ensure that it focuses on its central task of ensuring that the UK’s IP system promotes innovation and growth through efficient, contestable markets. It should be empowered to issue statutory opinions where these will help clarify copyright law. As an element of improved transparency and adaptability, Government should ensure that by the end of 2013, the IPO publishes an assessment of the impact of those measures advocated in this review which have been accepted by Government. 

It is plausible therefore to say that both the OFT and the IPO seek the same end of innovation and growth through different means, thus bringing the need for a MoU into focus. The OFT works to guarantee the competitiveness of firms by ensuring they only gain a legitimate advantage through sustained innovation. Conversely, the IPO incentivises innovation through granting IP rights with a quasi-monopoly, thus prompting debate on whether such rights are anti-competitive. The majority view however is that this is not true and will only occur where some firms seek to abuse the system. If executed effectively, it is likely that this MoU will help to eradicate any current abuse of the system and bridge the apparent gap.  The resulting market would facilitate growth of innovative firms while guaranteeing entry of new ones and shrinkage and/or eventual elimination of less creative firms. Such markets, referred to as ‘contestable’ markets, harbour higher productivity that allows for more efficient allocation of financial and human resources. 

That said, the Government is also keen to maintain the independence of both institutions and ensure that the IPO does not end up duplicating the OFT’s functions. Accordingly the Government believes that this MoU is the suitable route to achieving effective cooperation from both IP and competition regimes. Notably, The IPO will also seek to agree this framework with the Competition and Markets Authority, when it is established.