The Patent Box: Tips, Predictions -- and a special offer for blog readers

"Patent Box: Tips and Predictions" is the title of a seminar coming up on Tuesday 9 September, in the comfy setting of the Rembrandt Hotel, London. This is the sort of seminar that IP Finance approves of, since it offers a generous discount on its registration fee for the benefit of blog readers.

The programme itself focuses, as the title suggests, on the institution of the Patent Box (on which see, for example, earlier IP Finance posts here, here, here, here and here), and specifically on its UK version. The organisers (Management Forum) explain its ethos as follows:

"The Patent Box regime has bedded in - is it working? Big companies are obtaining major savings on tax through the regime - are you? The EU has asked questions about the legal validity of the regime - where might this end? Ensure you're adopting the best practice Ensure you're future proofing your IP tax measures".

The cast of this event is chaired by Gwilym Roberts (a partner in the London-based IP practice of Kilburn & Strode, and a person whose curiosity drives him to make every effort to keep himself well informed regarding the latest IP developments), and  the speakers are drawn from each discipline that has something to offer those seeking to get a decent tax break (and, in the case of Her Majesty's Commissioners for Revenue and Customs, to stop them getting indecent ones).

The discount (which can be enjoyed by readers of this blog and/or the IPKat) can claim a 20% discount on the full fee of £598 plus VAT) by emailing their registration applications to Sue at registrations@management-forum.co.uk, quoting the VIP blog-readers' code IPKat20%.  According to this blogger's calculations, that should bring the price down to £478.40, but you should check the arithmetic for yourself first, since he has done the sum five times and managed to get three different results ...

How (indeed can) we value the commercial contribution of design to a product?

The value of IP assets can be seen from two vantage points: one focuses on the contribution that IP assets make to the value of a product or an entire company, while the second centere on their value as a tradeable asset. One would think that the former would attract more attention than the latter. After all, most companies never even consider selling their IP assets; for them, the value of these assets is connected in some way to the activities of the business. But this does not appear to be the case. For almost a decade, what seems to have grabbed popular attention is not the nuts and bolts of how IP contributes to a company’s bottom line, or more generally, its competitive position, but rather the amounts paid for a number of IP (primarily patent) portfolios.

In truth, once one gets beyond the pharmaceutical industry, where the connection between robust patent protection, products and premium pricing seems clear enough (as well as the converse—think “patent cliff”), the manner by which IP contributes to a company’s financial and competitive well-being is more murky. And yet, at the end of the day, given the money and man-hours devoted to developing IP protection in many companies, one would think that we are awash with reliable metrics that capture the relationship between a company's IP rights and its related commercial activities. The underlying principle appears clear enough. As stated by Gordon Smith and Russell Parr in their iconic work-- Valuation of Intellectual Property and Intangible Assets, 3rd edition, here:

[A] company lacking intangible assets and technology would be reduced to operating a commodity-oriented enterprise where competition and lack of product distinction would severely limit the potential for profits. Conversely, a company possessing proprietary assets can throw off the restrictions of commodity-oriented operations and earn superior profits.

But how this sensible observation is translated into measurable indicia remains a challenge. This is especially so when design rights are involved. As IP people are well aware, design protection tends to enjoy a back seat to patents, trade marks and copyright in most IP practices. While it is not infrequently stated that design is crucial for a product’s success, I have seen few analyses that really dig deep into how design protection actually contributes to a company’s bottom line. Indeed, in the Smith and Parr book itself, designs are mentioned in passing only once. Against this backdrop, I was intrigued by the following observations that appeared in the July 12th issue of The Economist regarding the latest restructuring of Philips (“Philips: Lights out”), here.

"Philip’s fastest-growing business last year was one that involves little cutting-edge technology: ‘consumer lifestyle.’ … Philip’s strong designs allow it to charge a premium for its food processors and electric razors, especially to Asians. To stay close to them, the division moved its headquarters to Shanghai three years ago.”

And so I asked myself—how does the The Economist know that it is Philips’s prowess in product in design that enables it to charge a premium? As an anecdote, I in fact purchased a new Philips electric razor several months ago. The major reasons for the purchase was that I have owned a Philips electric razor of some kind for over 30 years, I have come to trust the technical capabilities of these branded products and I was impressed by the functionality of the new model. True, I found the design of the product sleek and attractive, but it was not a major factor in purchasing decision. Maybe, however, I am an exception; perhaps product design is crucial for these products, especially with Asian consumers. If so, how does one measure the contribution of the product design, as separate and distinct from the power of the Philips brand and the technical capabilities of the device, in being able to charge a premium price?

The answer to the question of how much does design matter is not a matter of analytical interest only. We have witnessed during the past several years an increasing reluctance, at least in U.S. courts, to grant injunctive relief unless the IP right (usually a patent) is the major component of the product at issue. There is sense to this approach, especially for a product protected by multiple patents. But what about a registered design for the product? Can it be reasonably concluded, as the article in The Economist did, that it is the design elements that are central for the uniqueness of the product. If so, protection of the product design might make it easier to obtain injunctive relief than will an action for infringement based on a single product component protected by a patent (consider the Apple-Samsung litigation in the U.S.). To determine whether infringement of the design justifies an injunction depends upon the importance of the design to the overall value of the product. How this can be determined still seems to me to be a daunting question.

IP Evolution: a chance to talk

This morning, in The Andaz Studio (a rather smart and revamped meeting room in what used at one time to be a station hotel next to London's Liverpool Street Station), a group of IP enthusiasts, administrators, owners, practitioners and monetisers came together at the invitation of AISTEMOS (on which, see earlier post here) to discuss the evolution of strategy for dealing with IP as an asset class while eating a sumptuous buffet breakfast.

With AISTEMOS CEO Nigel Swycher in the chair, Sir Robin Jacob (head of IBIL, UCL) opened the discussion by asking whether IP monetisation and its treatment as an asset class is actually such a new topic, adding some critical comments concerning the "toxic mixture" of factors that make not just patent litigation (a major driver of IP monetisation) but all litigation such big business in the United States. These comments triggered a variety of responses. Larry Cohen (Latham & Watkins) thought it easier now to raise money on the strength of ideas, though it's still true that those who need the money don't know where to go for it while those who have the money have too little idea as to how to evaluate the worth of an idea-based loan. This lack of knowledge of IP on the part of lenders, if excusable since the banking community has more to deal with than merely IP, was emphasised.

Tony Clayton (Chief Economist, UK Intellectual Property Office, which published its Banking on IP report last November) then spoke of the problem he had identified, which is not one of starting up new innovation-based businesses but one of scaling them up. In the Far East we've seen state-sponsored capital being made available, but the preference of the UK was for private sector finance. Topics raised here included the presentation of information at the point at which a loan was sought, the difference between one-patent-per-product industries and those which are more complex. The use of Big Data to unravel these complexities was advocated -- bearing in mind that machines can deal with data, but they can't understand it. Should people who make decision on the basis of data analytics be fired? That's an overstatement, but those self-same analytics can take away jobs by doing the unintelligent tasks and leaving only the intelligent tasks to IP decision-makers.

Following a short break for the purpose of replenishing empty plates and then not-so-empty stomachs, the discussion resumed, opened  again by Sir Robin.

Could we ever imagine a free market for IP, just like art, precious commodities or pork bellies? Businesses like Ocean Tomo were founded on the assumption that there could be, but the occasional auction sale or publicised transaction hasn't yet been scaled up?

Tony Clayton pointed out that this is already being done for the copyright industries with the Digital Copyright Exchange: so far, things have gone slowly [this blogger wonders whether there should be some reference to the Copyright Hub here], but the trick is to persuade people who own the copyright that there is a market for their copyright properties. By taking a non-transparent, short-term position, they are hampering the growth of the market.  Roger Burt added that there are two very different types of market for IP: one is for IP that people want to use, like essential technologies governed by FRAND terms, and one is for IP that people don't apparently want to use.

Risk: a game for some, but a matter
of life or death for an IP-owning business

The discussion then turned to the strategic use of patents in litigation, and the vulnerability of single-patent and one-patent-per-product businesses to legal threats to the validity of their registered right. The role of insurance was raised here, with some actual figures being bandied around in place of the usual generalisations about how cheap or expensive IP insurance is.  The insurance industry hasn't been reacting too well to IP, largely because of the lack of reliable data: when any IP insurance premium is calculated, much effort goes into enumerating and evaluating the many risk factors; added to this is the cost of running a due diligence exercise on an insurable prospect. With better data, insurance companies can offer better value in their policies.

Is there any catalyst that might spark a sudden IP revolution in terms of valuation and funding decisions? No, said Tony Clayton, the process will be evolutionary, as demonstrated examples of successful IP-backed loans and ventures will encourage more lenders to commit their funds.  Robert Sumroy (Slaughter and May) added that one of the problems is that we love complexity: our law is not unlike the Babylonian Talmud in its complexity, and it's enjoyable to discuss and analyse that complexity -- but that's something that has to be overcome when selling the notion of IP to those who need to know about it but do not practise it.

Tony Clayton next observed that banks are more interested in getting money back after they have lent it than in gaining a security which they can dispose of if the loan is not repaid. The quality of the patent and an understanding of it are not much use in this regard. Roger Burt supported this: the borrower's business plan is key and (as Larry Cohen observed) it's not merely the quality of the business plan but the quality of its execution that counts.

Sir Robin closed the breakfast by saying he'd never participated in a meeting quite like this. Neither had we, and a good time was had by all.

Death of a Travelling Patent Box

Blogger Jeremy's recent report on the first birthday of the UK patent box system lead to one commentator noting that the Irish had given up their system. This blogger was intrigued by the report, since he knew that at least one patent aggregation entity had set up in Ireland and assumed that this was because of the favourable tax regime. Setting up in the UK was probably not an option since the UK's scheme contains a development condition and an active ownership condition that were designed to stop PAEs from exploiting the British system.

The abolition of the Irish patent royalty relief scheme was one of the conclusions of the Irish Commission on Taxation set up in 2008 to review the appropriateness of the Irish taxation system. The committee was tasked to consider how the Irish tax system can best support economic activity and promote employment and prosperity in the country. It seems therefore strange that the UK government is promoting the patent box as a means of promoting economic activity.

The Irish scheme was a great deal simpler than the UK scheme. Basically any royalty income derived from a "qualifying patent" was exempt from income tax and corporation tax. A qualifying patent was a patent made on an invention for which the R&D work was carried out in a country in the European Economic Area.

An individual was only entitled to the royalty income if he or she were an inventor or a co-inventor. An annual limit of EUR 5 million was placed on the relief.

Dividends paid by a company our of patent income were also tax exempt. The commission concluded that the relief had not resulted in any increase in R&D activity - although they provide no data to back up their statement. It was also noted some companies were using the scheme as a taxi avoidance device to remunerate employees.

Intriguingly the commission concluded that the patent income exemption is a "windfall gain" after a successful invention, and not an incentive to encourage research and development. This is definitely an interesting claim and it would be highly useful to have some statistics to back it up. It would also seem to contradict the view of the British government that the tax savings would put more money into the innovation ecosystem. The Commission did conclude that R&D tax credit incentivises research and development activity more directly than the patent royalty scheme.

So how much did the Irish government actually save by eliminating the tax exemption for patent royalties? A mere EUR 84 million per annum in 2006. Certainly nothing like the millions that the UK scheme is supposed to release for R&D. On the other hand the Irish corporation tax rate for trading income is 12.5%, which is not significantly higher than the 10% headline rate that patent box is supposed to bring - and in practice is higher because of the need to deduct marketing assets and routine returns.

So do the Irish regret scrapping their scheme? Maybe - a discussion recently featured in the pages of the Irish Times.

Consumer electronics and IP: it's about management, stupid

It remains the great unknown: to what extent does IP contribute to the success or failure of a

company (or even an entire industry)? In truth, the possible answer to the question will depend upon the circumstances—pharma will certainly yield a different analysis to that of a media company. Even recognizing the diversity of the context, however, this blogger has had the long-felt sense that we are still far away from generalizable analytical structures that will allow us to reach reasonable conclusions across multiple settings. Against this background, I read with great interest an article that recently appeared (July 12th) in The Economist. Entitled “Eclipsed by Apple”, here, the article sought to explain the fall of the Japanese consumer electronics industry. Wherever one turns, decline in this industry is noticeable, whether it be Sony, Hitachi, Panasonic, Sharp, or lesser-known Japanese companies, with the likes of Apple and Samsung taking their place. This fall from commercial grace is particularly puzzling if one considers the various IP assets that these companies appear to possess.

Let’s begin with the power of the strong brand. I remember having lunch with a senior official of a major international IP organization who said categorically, “at the end of the day, it is not about patents or copyright. The only really valuable IP asset is brands and the goodwill that is embodied in one’s marks.” So what about the role of branding in the consumer electronics business? The Economist observes: “A strong brand is no longer enough to justify a sharply higher price” (pointing to Samsung’s recent decline in operating profits). The article attributes this in part to the fact that the consumer electronic business “is an impossible business for nearly everyone.” But that proves too much. In a cut-throat market, one might reason that a strong brand can help one stand out, even if the brand does not have the power to command as premium a price as might be desired. But that does not seem to be the case. As strong a brand as Sony once was (think of the Sony Walkman or Triniton TV), the brand seems to have been (and is) only as formidable as its latest product. A strong brand can perhaps continue to command a premium price for a while, but ultimately it is coming up with new products that matter. (Apple and Samsung, are you listening?)

If a powerful brand does not provide a sure-fire, long-term anchor for success, what about the products themselves? On this, the article had this to say:

“If their chief executives were visionary leaders willing to take risks, Japanese electronics firms could do much to regain their lost lustre, says Roderick Lappin, who heads the Japanese operations of China’s fast-rising Lenovo. Their unrivalled engineering, though often in excess of customers’ needs, is still an advantage, he says. They sit on a trove of intellectual property in the form of patents. Much of this could prove invaluable in the field of “wearable” technology or the much-hyped “‘internet of things’ …“.

It would appear that these companies have great engineering know-how and a lot of patents, particularly in a couple of emerging fields. That sounds like a great double-dose of valuable IP. But the engineering know-how seems to be detached from customer wants. As for the patents, they appear to own a lot of patents for wearables and the internet of things. But we are not really told why this “trove of patents” will make a difference for these companies in these emerging industries. Moreover, to the best of my understanding, some of these companies possessed patent troves for past and present technologies, without these patent portfolios necessarily being translated into oversized commercial success. Why will the current patent trove be any different? Or will the value of these troves be measured only if the companies do not enjoy significant success in the field of wearables and the internet of things? If so, this will be redolent of, e.g., Nortel and Kodak, both of which sold their patent portfolios because they had no other choice.

At the end of the day, perhaps the most encouraging thing said in the article about the industry was in connection with Sony, where its smartphones and tablets are enjoying some success due to “one simple, customer-centered innovation—making them waterproof.” But this does not seem to be the stuff of high-level engineering or massive patenting, but simply a shrewd management decision to give the client what it wants (or needs). If so, neither the woes nor the possible solutions to the crisis of Japanese consumer electronics rest primarily with IP. While IP and what it embodies are not unimportant, ultimately what matters is enlightened management, including, but in no way limited to, the effective creation and utilization of IP. But our understanding of how IP fits into the broader picture of successful management still has a long way to go.

Open innovation and overpropertization: a new article

"Open innovation's answer to the challenges of patent overpropertization" is an article by W. Wesley Hill, who has recently completed an LLM in Information Technology and Intellectual Property at the University of East Anglia. This article is now available online, to e-subscribers of Oxford University Press's Journal of Intellectual Property Law & Practice (the print version will be published in due course; JIPLP's website is here). According to the abstract:

In 2003, Henry Chesbrough introduced the concept of open innovation to the study of research and development (R&D). Open innovation teaches that technology advancement is best fostered through inbound and outbound R&D investment and the exchange of innovative knowledge. Patents, often the subject of technology transfer, are characterized as a bargain between the inventor and the State. Without propertization through the patent bargain, it is argued, market failure occurs.

Despite their close ties, the relationship between open innovation strategies and the patent bargain is best described as both friendly and adversarial at the same time. Propertization of innovative knowledge through the patent bargain has, paradoxically, had the effect of blocking future innovation. Due to overpropertization, patent trolls and patent thickets have arisen that threaten to stifle advancement in new technologies.

This article discusses open innovation strategies that offer answers to the challenges of overpropertization. Where rent-seeking behaviours threaten future technologies, defensive pooling manages risk; where innovation-blocking thickets arise, private sharing regimes cross-license patents; and where innovative knowledge is best protected as confidential information, trusted intermediaries can facilitate exchange. In each case, open innovation is at work.

If any readers of this blog happen also to get hold of this article, it will be good to know what they think, particularly with regard to the author's conclusion:

Open innovation emphasizes the character of the IPR as a tradable good, rather than a mere exclusionary right. As Chesbrough documents in his open innovation theory, a shift toward openness in inflows and outflows of knowledge is occurring. Perhaps the closed innovation paradigm has given way to market behaviours that are best viewed through the lens of open innovation: where rent-seeking behaviours threaten future technologies, defensive pooling manages risk; where innovation-blocking thickets arise, private sharing regimes cross-license patents; and where innovative knowledge is best protected as confidential information, trusted intermediaries can facilitate exchange. In each case, open innovation is at work, enabling technology transfer and responding to the challenges of overpropertization.

Global Innovation

Last Friday saw the Australian launch of the Global Innovation Index in Sydney. The massive 400+ page tome is co-publshed by WIPO in association with INSEAD and Cornell University. It's packed with metrics about the innovation process, ranging from R&D spend and other inputs to outputs such as the number of patents. The data is divided into country sections and it's a useful tool to identify best practices. No doubt the headline data will relate to the overall index and the placing of individual countries. The headline ranking index shows tiny Switzerland out in the lead, followed closely by the United Kingdom, Sweden and Finland. The US occupies sixth place (just in front of Singapore) and German is back in 13th place. Togo and Sudan are bottom of the list (at places 142 and 143 - not all countries are covered). Whilst Switzerland has remained global leader for a number of years. the rise in the UK position (from 10 in 2011 to second position in 2014) is fascinating. This is partly due to the country's improving economy but also due to the open markets in the UK which enable access by non-agricultural products. The report also looks at total R&D spend. Spending has rebounded back in most countries since the global financial crisis, but the amount of public (as opposed to private) R&D spend has begun to fall off. There are still countries in which the spend is lower than before the financial criss, but the message is that spending on innovation is still increasing. Hong Kong and Singapore are the only two countries in the top ten and their relative positions have changed. Singapore has overtaken Hong Kong (which has been slipping continuously over the past few years). Reports like this represent only a snapshot of economic activity and compare current performance only. A more detailed review will show that in most cases, countries improve their performance from year to year. This probably shows the main value of the reports - to highlight best practice and to encourage countries to learn from each other. The overall rankings depend, of course, on the weightings given to the various factors that make up the global index and need to be treated with some degree of scepticism, but the message is clear. Innovation leads to economic growth - as economist Robert Solow showed - and that leads to increased GDP. How that wealth is shared is then a matter of controversy, as Thomas Pitketty illustrated in his recent work, Capital in the 21st Century.

YUM Brands has Trials in China: A “Social Ideology” Fix to the Problem?

YUM Brands (YUM), the owner of KFC and Pizza Hut, has generally enjoyed enormous success in China for a “foreign brand”.  The success has been attributed to a strong first mover advantage.  And, the brand is, of course, critical to that first mover advantage.  However, YUM has struggled with issues concerning “trust,” first because of “excessive antibiotics and hormones,” which led to around a 40% drop in sales.  According to several news outlets, here and here, foreign brands are at a disadvantage to “home grown” brands in China because the news media in China is supposedly more inclined to criticize foreign companies.  So, the issue has been how to effectively rebuild trust with consumers in a foreign brand after a scandal in China.  YUM Brands became a model of success after the “antibiotics scandal” by taking immediate action:

Promis[ing] to test meat for banned drugs, strength[ing] oversight of farmers and encourag[ing] them to improve their technology. It said more than 1,000 small producers used by its 25 poultry suppliers have been eliminated from its network.

The success of the strategy (along with some tasty chicken and a better economy) appears to have helped sales bounce back 11% at KFC the past year, as reported by the BBC.  However, YUM is facing troubles again.  News has just broke about another scandal concerning the use of “expired” chicken.  What can YUM do to fix its brand?  One possible strategy was discussed in a Forbes article by Avi Dan on the information age and brand loyalty:

Do well by doing good: Marketing is no longer an economic function alone, but a social force as well. Within minutes of the Haiti earthquake, donations requested on Twitter started flowing in via text messages in coordination with the phone company. Pepsi bypassed the Super Bowl for the first time in 23 years, and instead of buying $3 million spots in the game, announced on its Facebook page that it will donate $20 million to worthy causes. Social ideology increasingly reinforces brand loyalty.

I don’t know if this strategy worked well for Pepsi, but YUM may need some new ideas.  Has this strategy worked well for other companies in dealing with a scandal?  For sure, brand owners carefully manage their image.  And, the first mover advantage is helpful, but it relies on a strong brand and if the brand fails (again), then what do you do to maintain a competitive advantage. . . . 

Education to combat piracy: great idea, but is there a metric?

I received this media release from the UK Government yesterday. I'm puzzled as to why it is embargoed till 00:01 on Saturday morning [if you're wondering, I wrote this piece yesterday afternoon and timed it to go off at 00:01] and intrigued as to what the word "today" means in the first line of the text. Presumably the Government's welcome must have happened some time in the 59 seconds available.  Anyway, this is what is says:

EMBARGOED: NOT FOR PUBLICATION OR BROADCAST UNTIL 00:01 SATURDAY 19 JULY 2014 

NEW EDUCATION PROGRAMME LAUNCHED TO COMBAT ONLINE PIRACY 

Government today welcomed a new industry scheme, Creative Content UK, which will promote legal entertainment online and warn Internet users whose connections are being used to illegally share films and music. 

Business Secretary Vince Cable and Culture Secretary Sajid Javid revealed the UK’s creative industries and internet service providers (ISPs) have agreed the joint scheme. This will aim to raise awareness of copyright by informing those whose internet connections have been used to illegally share copyright material and help them find compelling, legal alternatives. 

The Cabinet Ministers also revealed the scheme would be supported by a joint creative industry and Government three-year education campaign towards which the Government is contributing £3.5 million. 

The campaign will help to reduce online copyright infringement, raise awareness of the benefits that copyright brings and promote the use of legal digital content.

This new initiative follows a similar partnership between the movie and music industries and ISPs in the United States. The  Center for Copyright Information was established to help direct consumers to the growing array of legitimate online creative content and send out alerts to ISP subscriber accounts that have been used to illegally share films and music.  

Speaking at the Spotify offices in London, Vince Cable and Sajid Javid outlined the importance of tackling infringement and intellectual property crime and working together with businesses to crack down on online piracy which is estimated to cost the global music industry alone more than £7 billion. Business Secretary Vince Cable said: 

“The creative industries in the UK are one of our brilliant global success stories. We have unrivalled creativity – from record breaking musicians to box office films - that excite and inspire people all over the world. Yet too often that content is open to abuse by some who don’t play by the rules. That is why we are working with industry to ensure that intellectual property rights are understood and respected. Education is at the heart of this drive so people understand that piracy isn’t a victimless crime - but actually causes business to fail, harms the industry and costs jobs.” 

Culture Secretary Sajid Javid said: 

“Copyright is one of the foundations the UK economy is built on.  Our creative industries contribute £8m to the UK economy every hour and we must ensure these businesses can protect their investments. The alert programme shows industry working together to develop solutions to this threat to our creative industries.  It will play a central role in raising awareness of copyright and pointing people toward legal ways to access content, and I welcome this effort." 

Commenting on the announcement of the programme, Chris Marcich, President and Managing Director EMEA of the Motion Picture Association (MPA) said: 

"It is fantastic that the UK creative community and ISPs have come together in partnership to address online copyright infringement and raise awareness about the multitude of legitimate online services available to consumers. We are also grateful to the UK Government for backing this important new initiative. This is just one piece of the overall approach to tackling illegal online infringement and promoting the importance of copyright. This will enable consumers to receive the best possible user experience and sustains the UK’s creative community and economy, incentivising the creation of new movies and other creative content.” 

Geoff Taylor, Chief Executive of the BPI said: 

"It's a wonderful time to be a music fan - you can listen to almost any song ever released, instantly, wherever you are. But not everyone is familiar with all the different ways to do this - whether for free or from a paid service - while at the same time making sure the artist is also fairly rewarded.  This landmark initiative marks the first time that entertainment companies, broadband providers and the Government have come together in a major campaign to engage consumers through their passion for music, film, TV and other content and to support them in enjoying it safely and legally online. It should mark a real step forward for digital entertainment in the UK." 

The creative industries sector contributes £71.4 billion towards the UK economy and is estimated to support around 1.68 million jobs.

Against the contribution of £8 million per hour by the creative industries, a Government contribution of £3.5 million over three years does not sound hugely generous, particular if one surmises that online piracy is likely to drill a far larger hole in the public purse through loss of revenue in respect of income tax, corporation tax and value-added tax.

It would be great to know how the costing of this programme has been calculated, and how its cost-effectiveness will be measured.