“European SMEs generally make effective use of European patents to protect their key inventions, and successfully commercialise up to two thirds of them”, according to a new study published by the European Patent Office (EPO). However, serious challenges remain, ranging from a lack of IP expertise and resources available to SMEs, to the need for more contacts to support their commercialisation efforts across Europe.
Patents protect inventions – essentially an innovative solution to a technical problem. They provide a way for the patent owner to reap the benefit of their creativity, hard work and financial investment by preventing imitation by competitors, and allowing for arrangements such as licensing to generate revenue.
Patents are not just the preserve of large multi-national corporations. In 2018, one in five European patent applications in Europe was filed by a small or medium size enterprise (SME) or an individual entrepreneur. These small businesses are responsible for many breakthroughs, which make our world a safer, smarter and more sustainable place. They are also a key driver for economic growth. The EPO study cites statistics which show that SMEs who own IP rights, including patents, consistently outperform their non IP-holding counterparts. They are more innovative, more likely to grow over time, and have almost 32% higher revenues per employee.
European patents are particularly attractive to SMEs commercialising inventions, because a single European patent application has the potential to give rise to national patents in up to 38 countries across Europe. As an aside, for those interested in the UK market, the system remains just as attractive despite a looming Brexit, because the European patent system is independent of the European Union.
The EPO’s study looks at the practices, successes and challenges related to the commercialisation of European Patents by SMEs, with a view to allowing policymakers to make informed decisions on how to support SMEs in their endeavours.
The study suggests that a clear majority of the SMEs surveyed consider the invention for which they have filed a European patent application as important to their industry, or highly relevant to their core business. Roughly two thirds of the inventions covered by the survey are already commercially exploited. Most of the inventions that have yet to be commercially exploited are either only at the development stage, or potential commercial opportunities are still being explored.
Half of all commercialised inventions are exploited in collaboration with an external partner via a licence, technology spin-off, or co-operation via cross-licensing, and this figure is even higher if planned partnerships are taken into account. From this evidence it appears that resource-constrained SMEs rely heavily on partnerships as a way of entering new markets or sharing the financial burden of innovation. The majority of SMEs surveyed reported targeting business partners located in either their own country, or other European countries, making the European patent system, with its broad geographical scope, a particularly useful tool.
The study does, however, report major challenges faced by SMEs in identifying the right contacts for setting up collaborations across Europe, with SMEs apparently struggling to find partners outside their close circle of personal or business contacts. Other key challenges include limited availability of IP expertise and resources.
The study offers policymakers valuable insight into the challenges facing SMEs, and concludes that increasing the effectiveness of market intermediaries emerges as a key policy lever for fostering patent commercialisation by SMEs in Europe.
We watch with interest to see what changes may be made by policymakers in the UK and elsewhere, following these findings.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.