Yesterday, 29 October, the EUIPO published an updated report on Intellectual Property Rights (IPRs) and Small and Medium Enterprises (SMEs). This 2019 survey builds upon an earlier report from few years ago and is based on solid input data – more than 8,300 SMEs from across the 28 EU Member States have been interviewed. The report shows interesting results that could lead to intriguing conclusions on the role of IPRs in SME’s business strategy. Below we have reviewed and have suggested an interpretation on a few results of the survey:
1. How innovative are SMEs?
SMEs’ self-assessment of their innovative nature is rather confident. 58% of the SMEs claim to be innovative, whereas this percentage reaches more than 70% when only SMEs owning IPRs are taken into account.
Moving away from self-assessment, the reality seems quite different. For instance, only 13% of IPR owners have attempted to obtain financing using their intangible assets and only 24% of IPR owners have actually signed a license agreement for their IPRs.
It seems that SMEs tend to play the “innovative” card as a promotional and reputation-raising tool, whereas in fact they internalize their intellectual property assets by refraining or failing to monetize them externally. The study further shows that SMEs often see IPRs as a cost rather than an investment because they do not see the value that it adds, and there is a general lack of understanding how to maximize the potential of IPRs. All of this may be due also to the still unsatisfying levels of IPR awareness amongst SMEs.
2. How aware of intellectual property are SMEs?
Against the high share of all SMEs claiming to be innovative (58%), some 48% of the SMEs that still do not own IPRs admit that they are poorly aware of what intellectual property is and how it affects their business. This demonstrates that an increase of IPR awareness amongst SMEs is utterly needed. Such increased awareness would likely lead to enhanced levels of IPR monetization (which monetization is still surprisingly undeveloped in terms of financing and licensing – see section 1 above). In the same vein, it should be noted that almost 40% of the respondents who failed to register their IPRs stated as a reason the lack of knowledge of intellectual property and its benefits.
A rather striking result of the survey relates to the share of legal/IP experts in IPR awareness. Only 22% of the interviewees state that they rely on legal experts as a source of information on intellectual property. On one hand, this low percentage may easily be attributed to the fact that an opinion from legal/IP expert is quite costly source of information compared to a simple Internet search. A legal advice could also be too complicated in terms of legal language in comparison to explanations found on the Internet.
On the other hand, however, this result should give food for thought for all experts in the IPR field. It seems that legal experts do not successfully reach new SMEs and startups which do not have IPR knowledge yet (or, even if they reach them, the costs for initial advice may turn out prohibitive for young EU businesses). In any case, IP/legal experts could use more flexibility in their approach to SMEs, both in terms of establishing communication and starting work with them.
3. Which is the most important IPR?
Owners of IPRs consider that trademarks are by far the most important IPR. 58% of the interviewees claim that trademarks are of high importance for deriving a competitive advantage in their business activities. Patents come out second with 32%, whereas designs make the top three with 24%.
First of all, the above results strongly demonstrate the importance of registered IPRs. All top three IPRs, which are considered most crucial by SMEs, are registered IPRs (with copyright, as a non-registered right, coming out forth with 21%). This means that SMEs tend to value the certainty and the many legal and practical advantages of registration. In fact, over half of the interviewees with registered IPRs have seen a positive impact on their business after registration – such impact being in the form of increased reputation, higher turnover and access to new markets.
Secondly, the leading role of trademarks and designs comes as no surprise. We have always held the position that no business venture is sustainable without protection of its distinctive signs obtained at the very beginning of (or even prior to) launching business activities. This is especially true in the age of online and social media sales where the exposure to bad faith actors or imitators is higher than ever. On the top of this, trademark and design registration interrelates to other fields such as domain names and unfair competition where the ownership of prior registered rights is crucial in the course of potential disputes.
The full text of the EUIPO report may be found here:
https://euipo.europa.eu/ohimportal/en/web/observatory/sme-scoreboard#2019