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FICPI | How IP Protection Builds Value & Growth for Small Businesses

Recognizing World IP Day, April 26th

Most people associate the invention of the sewing machine with Isaac Singer and the Singer Corporation.

In fact, an inventor named Elias Howe originally patented the design in 1846.

Howe sued Singer in long running litigation which was eventually settled with both men and their companies receiving royalties from sales.

Ironically, neither Howe nor Singer created the first sewing machine. That man was Walter Hunt in 1843. Hunt decided not to patent his invention because he thought it would lead to unemployment.[1]

Stories like this one appear to underline that the time and cost of investing in the protection of Intellectual Property (IP) is only an option for larger companies.

That is an unfortunate myth.

Larger companies invest in IP for good reasons – to protect their products and services in the marketplace, discourage unfair competition and create new revenue streams for themselves., trademarks.

Investing in IP also helps large companies manage their technical knowledge by understanding where the knowledge resides in the organization and how to protect it. For example, the need to protect important knowledge when key employees leave.

Every one of those benefits is available to small and medium sized businesses.

Because of the need to increase the protection of IP rights by small and medium-sized enterprises (SMEs), the theme chosen for this year’s celebration of World IP Day is, “Intellectual property and small businesses: Taking big ideas to market”.

Celebrations and themes for World IP Day are led by the World Intellectual Property Organization (WIPO).

The organization which I represent at EACCNY is FICPI, the only international NGO whose membership consists exclusively of IP attorneys in private practice. FICPI thus represents an important constituency within the international IP system.

FICPI is partnering with WIPO to recognize World IP Day and provide information to SMEs about securing the rights to IP.

There is evidence that SMEs that apply for patents, trademarks or designs are more likely to grow quickly and succeed than those without.

A 2019 study demonstrates that SMEs which have sought and secured at least one IP right are 21% more likely to experience a growth period afterwards. [2]

The study, produced jointly by the European Patent Office (EPO) and the European Intellectual Property Office (EUIPO), found that SMEs which have at least one IP filing also are:

  • 10% more likely to be become a High Growth Firm (HGF) than those without IP rights applications.
  • 17% more likely to become a HGF by filing for IP rights at the European level.
  • 33% more likely to boost their chances of high growth by bundling trademarks, patents and designs, rather than applying for a single trademark or patent.

What drives that value and growth for SMEs?

Think of the time and money spent in protecting IP assets to be an investment. The return on that investment is considerable:

  • Competitors cannot lawfully make use of your innovation or work during the life of the protection.
  • It gives time to recoup your investment, particularly the considerable outlays in research and development.
  • The right to pursue legal action to stop copying and demand compensation from counterfeiters.
  • The product or process becomes more valuable by protecting its exclusivity.
  • The overall value of the business increases by holding patents and other forms of IP (as proven by the EPO/EUIPO study).

However, it appears that even these arguments have not been strong enough to motivate SMEs to engage in the process of protecting their IP assets.

The 2021 version of the EPO/EUIPO study found that less than 9% of SMEs in the sample own one of the three main IP rights (patent, trademark and design) – the figure is close to 60% for larger companies.

One of the ways that SMEs can overcome this reluctance, and be more successful in their rights applications, is by partnering with IP attorneys.

Patents, trademarks and designs are varied, complex and often difficult to obtain.

Without the help of a specialist IP practitioner, you are likely to find yourself spending far too much of your valuable time on the application.

If you give up, and do not complete the process, as happens to so many direct (unrepresented) applicants, you are putting at risk your valuable ideas and intellectual property.

A 2013 study, the Hoisl-Wagner Report commissioned by FICPI, examined the database of the European Patent Office (EPO).

The report concluded that applicants unrepresented by an IP practitioner are much more likely to lose rights simply by failing to understand the procedure or that a response is required – and that is after expensive filing fees have already been paid.

At random, Hoisl-Wagner tracked 50 applications for patent rights from SMEs for which there was no professional representation.

Researchers analyzed the online history and discovered that 29 out of the 50 applications were abandoned because the applicant did not respond to correspondence from the EPO.

Of the applications that were still alive, the first renewal fee at the third year was paid on only 19. Two of the applications were allowed, but none proceeded to grant.

The Hoisl-Wagner Report was commissioned as part of a wider FICPI initiative, known as ‘Project Orange’ after the name of the chairman, John Orange, which examined the value added by IP Practitioners to the innovation process.[3]

Summarized from the Orange Report, here are 10 ways that independent IP attorneys in private practice add value to SMEs seeking to gain the maximum value for the procurement of IP rights:

  1. Identify the IP rights that potentially exist and can be protected: It is often the recognition of the ability to protect an innovation in a particular way that is the key to realizing its value.
  2. Familiarity with a wide range of technologies: This accumulated experience is used in the initial consideration of the innovation to determine which features are protectable.
  3. Ability to describe and clearly define the innovation: One of the key skills of an IP practitioner brings to an innovator is to abstract the concrete embodiment proposed to more general principles.
  4. Skillfully drafting the IP application with appropriate breadth for the best protection: An essential part of the IP system is the need for specialist IP practitioners to describe and define inventions.
  5. Understanding new technology to differentiate the innovation and extrapolate potential future uses: IP practitioners are unaware of the new invention before it is presented to them, therefore they need a deep understanding of technology to extrapolate the potential use of the technology over the foreseeable future.
  6. Describing the innovation in a manner that is readily understood: It must be written to be widely understood and to withstand subsequent attacks by interested third parties who have the benefit of 20/20 hindsight.
  7. Understanding the legal balance of protecting the innovation while advancing the wider public interest of economic development: Helping the inventor disclose the invention in way that earns protection for the period of the rights but do so with sufficient details that it can be used by the public after the monopoly has expired.
  8. Balancing the basic needs of the IP system with obtaining the protection to which the innovator is entitled: The drafting of a specification and delineation of the claims is a core skill that can only be acquired through experience and mentoring.
  9. Anticipating objections and infringements in other countries and regions: In drafting the claim, a IP practitioner must consider whether the claim will be effective in preventing infringement in different jurisdictions because of the different laws, nature of the invention and the manner in which it will be deployed.
  10. Knowing how to avoid the IP rights held by others: Many of the skills in the drafting of patent specification are used in interpreting the patents of others and advising whether or not a proposed development is covered by any third-party patents.

I am a patent attorney myself, a partner at the intellectual property law firm of Greenblum & Bernstein, in Reston, Virginia. Therefore, I have a self-interest in pointing out the depth and complexity of the services offered by IP practitioner to SMEs.

However, given the stakes – the fact that SMEs which hold IP rights prosper and grow far beyond others which do not hold IP rights – and the too frequent failure of SMEs to complete the application process when they do not partner with an IP specialist, then the conclusion is clear.

For smaller companies which think they are saving money by trying to undertake their own claims to protect IP assets, it is a false saving.

The investment in partnering with an IP professional has a significant return, not only in a successful claim but also for the future of the organization which then owns the IP rights.

Author:

  • P. Branko Pejic, FICPI Representative at EACCNY and Partner, Greenblum & Bernstein PLC, Reston, Virginia, USA.

Compliments of The International Federation of Intellectual Property Attorneys (FICPI) – a member of the EACCNY.

[1] http://www.businesscareersguide.com/10-great-business-ideas-that-were-actually-stolen/
[2] http://documents.epo.org/projects/babylon/eponet.nsf/0/F59459A1E64B62F3C12583FC002FBD93/$FILE/high_growth_firms_study_en.pdf
[3] https://ficpi.org/system/files/gonzo/FICPI_The_IP_Practitioner.pdf