Pull Up A Chair. Be IP Aware: The Importance Of IP For SMEs

When we think of intellectual property rights, the first examples that come to mind are usually those owned by the big brands: the red sole trademark for the Christian Louboutin shoes, the patented iPhone, the top-secret Kentucky Fried Chicken recipe etc.

As a result, it is often easy to underestimate the value of IP for businesses that are either operating at a much smaller scale, or have not yet built up a successful brand. However, IP still plays a crucial role in small and medium-sized enterprises (SMEs) daily business and strategic business planning.

A Brief Introduction to Intellectual Property:

Intellectual Property (IP) is an area of law that I have always found interesting. The basic principle that underpins IP is the protection of ideas and inventions. While the fundamental basics of IP is a topic for another day, all you need to know for now is that that IP is essentially an umbrella term used to describe a range of legal devices that can be used to protect rights towards such ideas, inventions and technology.

However, as with most areas of law, IP is riddled with confusing terminology such as copyright, trademarks, patents, and hard IP to name a few. IP also often crosses over with several other areas of law so it is difficult to know where to draw the line.

Understandably, IP is quite a complex and daunting area of law to learn about. Nevertheless, the European IP Helpdesk is ready to help…

A Brief Introduction to The European IP Helpdesk:

The European IP Helpdesk is an advice service funded and managed by the European Commission’s Executive Agency for Small and Medium-sized Enterprises (EASME).

The main goal of the European IP Helpdesk is to help spread awareness of IP and provide free, accessible, and direct advice on a wide range of IP matters. The services of the European IP Helpdesk include:

Therefore, if you need personal support on a specific IP issue, want to stay on top of the latest developments in IP and Innovation in Europe, or are simply interested in a training session on IP – the European IP Helpdesk is the place to go!

The Webinar: The Importance of IP for SMEs

The Structure:

The structure of the webinar was as follows:

• 60 minute presentation
• 15 minute Q&A session

Before we began, we were presented with a list of objectives:

• What is Intellectual Property (IP)?
• What are Intellectual Property Rights (IPR)?
• Common problems of SMEs in their day to day activities?
• Why should I deal with IP/IPR issues? Why should IP be an integral part of my business strategy?
• How can IP be a business asset?
• Which IP protection tools exist/can I use (e. g. trademarks, patents etc.)?
• To which institutions can I turn for help?

The webinar presentation was kindly delivered by Claire Fentsch, a Senior Project Manager at the European IP Helpdesk.

The Presentation:

First, we covered a few basics.

Why is Intellectual Property important?

Intellectual property is a powerful tool for economic growth. It plays a very important role in business development and competitive strategy.

A strong intellectual property strategy is arguably what makes a company a household name. Nike is known for its ‘swoosh’ logo, McDonalds is known for its golden ‘M’ arches, Google is known for its search engine (the algorithm of which is a trade secret). You get the point.

The truth is, intellectual property is all around us! Let’s take the example of a sports shoe.

As you can see, even an item as simple as a shoe can be affected by multiple different types of intellectual property rights. Intellectual Property is a key player in the success of an enterprise!

Once we covered the basics, Claire then went on to discuss some of the dominant theories in this area of law.

• Invention inducement theory: the inventor is motivated by higher profits. Greater IP rights = more good inventions will be made.
• Disclosure theory: society is better off by granting intellectual property rights.
• Development and Commercialisation Theory: intellectual property rights granted at early stage provide assurance to inventor.
• Prospect Development Theory: controlled innovation is the better way to innovate.

To find out more about economic theories about the costs and benefits of IPR, click here.

Another reason why intellectual property rights are important is because they provide their owner with valuable protection. Intellectual property rights (IPR) are exclusive rights. It’s a two-way street – you can use IPR to prevent competitors from stealing your ideas and using your intangible assets. However, it is your duty to protect these rights – they don’t arise automatically just because you have created an idea or invention!

ACTION = PROTECTION

Therefore, it is vital that your intellectual property assets are:

1. Protected
2. Managed
3. Enforced

IP Basics:

Let’s first dispel a very common area of confusion.

What is the difference between IP and IPR? Intellectual property is a product of the mind – it is an invention or an idea. In contrast, an intellectual property right is when that particular idea or invention has gained legal recognition. Intellectual property rights make intellectual property tangible.

If you would like to own IPR, you need to be able to answer three questions.

Which type of intellectual property is most suitable for your idea or creation?

As we saw in the shoe example, there are many different types of IPR. Some of these rights are more suited to particular form of intellectual property than others. Here are the most common types:

To determine which IPR is most suitable for your idea or creation, here are some further guidelines:

The best way to understand how the different types of intellectual property rights work is to think of them as armour. As you can see below, each armour is different. In the same way that each armour serves its own purpose, intellectual property rights protect their particular intellectual property in their own way. And as you can combine different IPRs for your individual purpose and business strategy, your ‘armour’ should be as stable and as flexible as you need it to be.

Do you have to register your idea or invention for it to be legally protected?

Some IPR require registration, while others do not. It all depends on the type of intellectual property.

How long will your idea or invention be protected for?

Intellectual Property rights grant a monopoly over the intellectual creation. This means that nobody is allowed to use or commercialise your creation without your consent. However, IPR last for a limited amount of time – the duration largely depends on the type of right that you are protecting. The general rules are as follows:

• Copyright: lasts 70 years after the death of the author.
• Patents: lasts 20 years after the application.
• Industrial designs: last 25 years after the registration.
• Trademarks: last indefinitely as long as the renewal fees are paid.

Another important point to note is that Intellectual Property rights are territorial rights. This means that they will only be enforceable in the countries or territories that they have been registered in.

You may be wondering why this is the case – surely it would be easier to register your creation in every country? This is a common question, but the answer remains the same. It’s not about the more the better. Where you register your intellectual property should depend on where your customer base and competitors are. Some industries operate in only a few countries, so it would be unnecessary to register in territories that do not add any business value to your enterprise.

How can Intellectual Property be used as a business asset?

IP serves a number of functions in business. Here are the main ones:

• Prevents infringement and protects proprietary technology
• Increases profits via licensing
• Increases customer confidence
• Establishes a brand
• Top management can make quick decisions by linking intellectual property strategy with the overall management strategy
• Secures a share in niche markets

As you can see, Intellectual Property is not only beneficial to large public companies, but also to smaller enterprises. SMEs can benefit from all of the above functions! Unpatented technology or ideas and ‘know-how’ can always be stolen or leaked if left unprotected. Ultimately, the size of the company is irrelevant, but the risk always remains the same.

Now that we have established the functions that IP serves in business, here are some further reasons why IP is a valuable business asset!

1. IP has no limit on its value
2. IP can be leveraged in many ways
3. IP portfolio reduces operational risks
4. Companies that protect IP seem like more trustworthy partners
5. IP rights boost your marketing and sales

To illustrate this point further, Claire used an interesting example: Dyson. The British vacuum cleaner company relies heavily on its patents as part of its marketing strategy. You can even find a list of Dyson’s patent rights on their website!

If you wish to find out more about how IP operates as a business asset, have a look at these links:

• How can Intellectual Property Enhance the Market Value of Your SME?
• How do you Turn Inventions Into Profit-making Assets of Your SME?
• Why are Trademarks Relevant to the Success of Your SME?

While Intellectual Property is extremely valuable to a company, it has to be utilised in the right way. The next step in the webinar was to take a look at a number of potential IP strategies for SMEs. They can be grouped in three main groups: creation, protection, and utilisation strategies.

Protection Strategies:

The name speaks for itself! Protection strategies aim to acquire intellectual property or conceal technology as know-how.

Utilisation Strategies:

Utilisation strategies allow companies to license their intellectual property rights to other companies and vice versa.

It is worth emphasising that these strategies are not restricted. More often than not, many companies adopt a combination of strategies to best serve the needs of their business. The strategies that companies choose to take largely depends on their long-term goals, financial situation and the state of the market that they compete in.

Support Services and Useful Tools:

At the end of the presentation, Claire provided us with a number of useful support services and places to go if you would like to find out more about IP and how it affects businesses.

If you are an SME looking for information on IP, here are some useful sources:

• Intellectual property and business plans (Fact Sheet)
• Intellectual property management in open innovation (Fact Sheet)
• IPR management in software development (Fact Sheet)
• IP Audit: Uncovering the potential of your business (Fact Sheet)
• IP due diligence: assessing value and risks of intangibles (Fact Sheet)
• Auto-Plans International: IP and business growth (Fact Sheet)
• A double-line IP strategy for start-ups (Fact Sheet)
• Managing IP information for international business opportunity (Fact Sheet)
• The importance of an IP management structure in a research project (Fact Sheet)

In contrast, if you are like me and simply would like to learn more about IP, have a look at these links:

• ‘What is Intellectual Property?’: World Intellectual Property Organisation
• European IP Helpdesk: IP Specials

Final Thoughts…

IP isn’t an easy area of law. It is technical, overlaps with several other fields and industries, and is quite niche in comparison to other areas of law. Therefore, it’s understandable why students and small business owners are hesitant to explore it further. However, IP is a crucial asset to businesses of all sizes, and it is well worth your time brushing up on a few IP basics if you are interested in a career in business or commercial law. A webinar with the European IP Helpdesk is a fantastic way to do so!

As my first webinar with the Helpdesk, I wasn’t too sure of what to expect. Having had a look at the webinar objectives beforehand, I knew that there were a few gaps in my knowledge that I could benefit from being filled!

The European IP Helpdesk offers a wealth of free information and services and you would be wrong to think only accommodates business owners. As someone who does not own an SME nor has any immediate plan to set one up (for now!), I found the webinar incredibly educational and easy to follow. The European IP Helpdesk acknowledges that we may not all be IP whizzes (yet!), and therefore teaches in a way that puts everyone on the same level. The Helpdesk makes IP accessible, and that is what is most important.

As well as the useful content offered by the Helpdesk, I also think that it’s also worth applauding the way that the webinar was presented. Claire’s presentation style was straightforward, to the point, and careful. All ‘technical’ language was explained beforehand, and Claire ensured that we took it one step at a time. The presentation continuously encouraged us to question the role that IP plays in SMEs which in turn, led to a very engaging and productive Q&A discussion at the end.

Overall, my experience with the European IP Helpdesk was extremely positive and I would recommend anyone who is interested in IP to give it a go!