UK: Incentives In IP To Fuel To The Green Revolution

UK: Incentives In IP To Fuel To The Green Revolution

As part of its commitment to achieve net zero by 2050, the UK government has published a ten point plan for a Green Industrial Revolution. The plan focuses on stimulating development in ten technology areas, including advancing offshore wind and greener buildings (two areas where the UK ranks number one of the top ten patenting countries worldwide, according to a UK Intellectual Property Office report).

At the heart of the plan, the government considers that innovation will hold the key to achieving net zero. Major investment will be needed to realise the development and deployment of innovative technologies, if ambitious targets to tackle climate change the world over – including Manchester's own ambition to become a zero carbon city by 2038 – are to be met.

Innovation is inextricably linked to intellectual property, which exists to help innovators get value from their ideas and a return on investment. If the government is truly backing innovation, what incentives to create intellectual property is it offering businesses and entrepreneurs to fuel the Green Revolution?

UK IPO Green Channel

Patent applications for environmentally beneficial inventions can gain from the Green Channel, a free service that accelerates the application process by up to nine months.

Applicants have the option of which parts of the application process to accelerate (i.e. search, examination, publication), and in applying for the Green Channel are required only to make a request in writing setting out a reasonable assertion that their invention has some environmental benefit. It might be obvious to some that their invention has the required benefit, for example where the invention relates to a solar panel or a wind turbine. However, the Green Channel has wide application, for example a more efficient manufacturing process would qualify if suitably explained when making the request.

Accelerating an application can be beneficial in certain situations, such as obtaining a granted patent or positive examination report to attract investment or qualify for funding. Securing a granted patent can allow businesses to elect into the Patent Box, which is described below.

Also, the UK Intellectual Property Office lists all Green Channel applications on a dedicated publicly available database, so would-be investors can easily identify innovators in green technologies.

Patent Box

Though not exclusively for green technologies, the Patent Box has been created to encourage businesses to keep and commercialise their intellectual property in the UK.

Having a patent granted by the UK Intellectual Property Office or the European Patent Office allows business to apply a lower, effective 10% rate of corporation tax to profits it earns from patented inventions. The value of this incentive is set to increase significantly with the rise in the corporation tax from 19% to 25% in April 2023.

As a granted patent is needed for business to elect into the Patent Box, applicants can make use of the Green Channel if their invention has some environmental benefit to obtain grant of a patent more quickly.

R&D Tax Credits

Like the Patent Box, R&D Tax Credits provide a generous tax break to UK businesses to encourage innovation in all technology areas. R&D Tax Credits can be claimed in combination with the Patent Box, and can even be claimed on unsuccessful projects.

For businesses to qualify for R&D Tax Credits, they must be working on a specific project to make an advance in their particular field, which must be in science and technology, not a social science or theoretical field.

The available relief does depend upon the size of business, and whether the project has been subcontracted. For qualifying SMEs, a deduction of 230% of their qualifying costs can be made from their yearly profits, or a tax credit can be claimed if the business is loss making, worth up to 14.5% of the surrenderable loss. Large businesses can obtain a tax credit of up to 13% of qualifying R&D expenditure.

In Conclusion…

… there are incentives to create intellectual property, and the intellectual property system provides an environment for businesses and entrepreneurs benefit from creating new, or adapt existing, technologies, to meet sustainability targets like net zero. As innovation is inextricably linked to intellectual property, businesses should ensure that they have complementary strategies for each to capture and realise the value of their ideas.

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