The importance of Intellectual Property Rights for SMEs

February 11, 2014

There is a need for a better understanding and focus on Intellectual Property Rights (IPR) in the UK startup scene. Most often new ideas and disruptive inventions emerge from small, fast moving technology companies who are not afraid of doing things differently and breaking a few rules, especially the “we have always done it this way” model ingrained in established businesses. It is at this early stage that the startup needs to have a good understanding of where the value lies in their offering and also how best to protect it from competitors who are ready to copy. Making sure you protect your brand with trade mark registrations in key markets, registration of your new design or filing of patent applications on new technology inventions is a must to compete in national and international markets. If you have a Media or software company then you should be filing for IPR in those markets where you can get protection for them. Software for example is protected by copyright but also by patents in many markets like the USA.

 

Business models & increased IPR filings

There is often a discussion about the correlation between patent filings and innovation. As technologies and markets converge, the business model and market acceptance is often much more powerful than technology and patents to determine what will succeed or not. This does not mean however that the importance of IPR will disappear as openness and collaboration increases. Even taking into account variations between industries, we are seeing a continued growth in patent filings of 7.7% and for industrial design filings of 13.3% globally during 2009-2011.

The USA is still the dominant market for patent application filings but there is a clear shift in recent years to more patent application filings coming out of Asia. In 2011, China became the largest patent office handling 526,412 patent filings compared to USA handling 503,582 patent filings. Further the main filers in Asia, i.e. China, Japan and South Korea, also have much higher % residents in patent filings than other regions. We are likely to see an increased importance of the emerging countries in driving innovation due to their large market size and also as local companies move up the value chain in offering more advanced products and services. This will also increase the importance of IPR as shown by China over the last 10 years. China is not any longer the country who will copy your ideas – if you don’t protect your inventions you could end up paying licensing royalties to Chinese companies once they have patented similar inventions. Again it is important to make active decisions on what to keep confidential, share publically to prevent others from patenting it, and what to protect with patents.

 

Europe and United Kingdom falling behind

In a review of the top 100 most innovative Multinationals in the world based on patent analysis it was a worrying sight to see that not one UK Company made the list. The list was dominated by the USA, Japan and South Korea. The UK was behind European countries like France, Sweden, Switzerland and Germany when it came to different measures related to patenting activity by global companies. Add to this that the UK was below the OECD average for number of patents filed per capita behind technology ‘powerhouses’ like Belgium, British entrepreneurs are missing out on capturing the true benefit of their inventions.
This type of analysis that focuses purely on patent data should not be used to draw too many conclusions about innovation and new ideas without further investigation. It also reinforces the need for more than just patents in a market for new ideas. This highlights the need for SMEs and startups to fuel the increase in innovation and inspiration to help create economic growth in the UK.
Christian Bunke – IP LawBrief

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