On the 26th of April 2021, the Centre for Commercial Law at the University of Aberdeen organised a roundtable to commemorate the World Intellectual Property Day 2021, bringing together academics, practitioners, and postgraduate students. The aim of the roundtable was to discuss the relationship between intellectual property (IP) and small and medium-sized companies (SMEs), examining the reasons for SMEs limited engagement with IP and recommendations on the way forward. This essay presents some highlights of the event.
Professor Abbe Brown from the University of Aberdeen moderated the roundtable and highlighted some pros and cons of IPRs to SMEs.
Ms Seona Burnett from Vialex Legal Counsel Service briefly discussed the lack of IP awareness as one of the reasons for SMEs limited engagement with IP.
Dr Tshimanga Kongolo from World Intellectual Property Organisation (WIPO) highlighted the need for simplified word choice when speaking to SMEs about IP based on his interaction with multiple SMEs.
Mr James Brown from Murgatroyd discussed the need for Patent protection for SMEs in the technology sector and addressed the patent application cost-related issue raised by some speakers.
Dr Titilayo Adebola from the University of Aberdeen discussed the need for IP awareness in Africa and special support at the Continental level for women-owned SMEs.
Mr Philip Hannay from Cloch Solicitors commented on the need for IP awareness and noted that some IPRs do not require a formal application like in the case of copyright.
Dr Catherine Ng from the University of Aberdeen discussed the importance of trade marks and geographical indication to SMEs.
An ice-cream analogy was used to discuss the different types of IPRs during the roundtable. Just as there are different flavours of ice-cream, there are different types of IPRs and SMEs need to identify which flavour suits their business better. This can be trade mark, copyright, or patent. It is imperative to understand the distinction between the types of IPRs in order to identify the type of IP protection that the business needs. This knowledge will equip SMEs with the ability to identify multiple aspects of the business that might be subject to different IP rights.
A trade mark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. Protectable signs can be a word, combination of words, letters, and numerals. Symbols, drawings, and three-dimensional features can also be protected. Whilst trade mark protection can be formally registered, unregistered trade marks can still be subject to IP protection under the doctrine of passing off but the scope of protection of unregistered marks varies from one jurisdiction to another. Therefore the scope of protection of unregistered trade marks is subject to the national trade marks laws. Registered trade mark protection in the United Kingdom lasts for a period of 10 years and is subject to renewal for further periods of ten years (Trade marks Act 1994, s 42) and this duration of registered trade mark protection duration is similar in many other countries like the United States, South Africa, Australia and Brazil. An international trade mark protection system was introduced through the Madrid system which presents the opportunity to obtain international trade mark registration. This means that a single application filed has effect in each of the designated contracting parties which is cost-effective and convenient for the obtaining of worldwide trade marks protection.
Copyright on the other hand protects original literary and artistic works. This ranges from music, books, painting, sculpture, database and more. Copyright only protects works that have been fixated which means unexpressed works cannot be protected. It does not require formal registration for the right to suffice as the Berne Convention states that the enjoyment of the right is not subject of any formality. This means that copyright protection is automatically created when an original literary and artistic work is created. However, copyright protection, like other forms of IP, is territorial and national copyright laws on the scope of protection and duration can vary. For example, whilst copyright protection does not require a formal registration for the right to suffice, registration of a copyright is needed when filling an infringement lawsuit in federal court in the United States which is different from the stance in the UK. The general rule concerning the duration of copyright according to the Berne convention is that protection must be granted until the expiration of the 50th year of the author’s death. However, with the territorial nature of copyright laws, national laws can extend the protection duration as can be seen in the United Kingdom where literary, dramatic, musical, or artistic works are copyright protected till 70 years from the end of the calendar year in which the author die where the author is known (CDPA 1988, S 12 There are exceptions to this general rule with regards to anonymous or pseudonymous works where the term of protection under the Berne Convention expires after 50 years after the work has been lawfully made available to the public.
Patent is an exclusive right for the protection of inventions that are new, involve an inventive step and capable of industrial applicability. It gives the right holder the right to exclude others from commercially exploiting the patented invention without the right holder’s consent. Patents are territorial rights which means the exclusive right is only applicable in the country in which the patent is granted. However, the Patent Cooperation Treaty administered by WIPO presents the opportunity to a consolidated procedure with a multinational effect. This makes it possible to seek patent protection across multiple countries by filling a single application but the granting of patents still remains the duty of the national or regional patent offices. Patent protection is generally granted for a period of 20 years from the date of grant. Patent can be seen as an exchange tool which gives inventors exclusive rights for 20 years in exchange for a full disclosure of the invention.
SMEs play an important role in the growth of the global economy and workforce as according to the World Bank, SMEs account for about 90% of businesses and more than 50% of employment worldwide. According to the WIPO Director General Daren Tang, SMEs are the backbone and the unsung heroes of the global economy. He describes them as the engine for growth in a post-pandemic world. However, he went further to highlight the current lack of IP knowledge in this sector among many of them and their ignorance to the benefits of IP to business growth.
During the roundtable, some challenges faced by SMES which has led to a limited engagement with IP was extensively discussed. This ranges from a lack of awareness of what IP entails to the belief that IP is too complex. Some might argue that IP is quite expensive especially for SMEs who might be financially constrained. Some SMEs might be unsure on how IP can help their business grow. These reasons for the lack of knowledge and use of IP by SMEs were raised and extensively discussed during the roundtable discussion. I think the first step for SMEs is to identify aspects of the business that are eligible for IP protection. The SME can then go further to weigh the benefit of IP protection which might be the right to exclude others from commercial exploitation or its benefit as a tool for negotiation. However, it is also important for the SME to weigh in the price they might have to pay for the IP protection like in the case of patents a full disclosure of the invention is required in exchange for a 20 years exclusive right. This means that whilst IP might be a powerful tool for business growth, there might be a price to pay for the IP protection which SMEs might not be willing to take onboard. SMEs with inventions that are incapable of reverse-engineering for example might want to weigh the benefit and risks of patent protection against trade secret protection which do not require a full disclosure of the invention.
One main reason for SMEs limited engagement with IP is the current lack of sufficient IP awareness which ranges from either a complete lack of awareness of the existence of IP to a lack of awareness on how IP can aid commercial growth. This can be addressed by setting up local groups to carry out community outreaches for SMEs within each local community across the globe and more collaboration between organisations to maximise awareness raising through several media platforms. Some SMEs are unaware of the existence of IP which might be arguably seen mostly among SMEs in the rural areas or women-owned businesses mainly in the Global South. This is because, whilst there is information online about IP, some SMEs do not have the resources to access this information also, whilst some might have the resources to go online, the ignorance of the existence of IP is a barrier that needs to firstly be addressed.
Dr Tshimanga Kongolo from WIPO highlighted that whilst there is a need to create more awareness, the way in which IP is explained to SMEs is very important to address the perception that IP is complex. He highlighted how simplifying IP discussions will aide better understanding for SMEs. This can be done by a move away from the traditional ‘complex’ explanation of IPRs and a use of alternative word choices to explain IPRs to SMEs who might lack legal knowledge.
Whilst IP scholars and practitioners promote IP for SMEs, SMEs are more interested in business growth. IP is an asset that can be commercialised through several methods. IPRs can be subject to license agreements that allows third parties to exploit the protected product or service in return for payments as well as subject to cross-licensing and collaboration. IPRs presents SMEs with a valuable business asset which can be perks to the business when seeking investments from potential investors like venture capitalist, which in turn can lead to business growth. It can also give SMEs a competitive edge in the global market as it distinguishes them from other businesses as evidenced in the WIPO case studies on the use of IP by SMEs. Señor Rogelioa coffee processing business in the Philippines for example noted how having a registered trade mark helped their coffee rise from “its humble beginnings in a small town in the Philippines to now having global recognition” as it enabled them to attract new customers and expand its business partnerships.
An understanding of IP will also be beneficial to SMEs outside its ability to directly aide business growth. It will assist SMEs to respect the IPRs of others which in turn protect the business from a potential infringement suit. Infringement claim against an SME can severely affect the business and in worst cases cripple the business as unlike large companies with IP experts, SMEs might lack the legal and financial resources to engage in an infringement suit which can be time consuming and expensive. Furthermore, lack of IP protection might expose a valuable invention or creation to bigger competitors who have the resources to commercialise the product or service at a faster pace and affordable price leaving the SME at a loss of the financial benefit.
It can be argued that on one hand IP presents SMEs from indigenous communities with a safe space to commercialise their traditional knowledge. This is evidenced in another WIPO case study from the Salvadoran female designers who used traditional artisanal production techniques and products to create original fashion designs with indigenous characteristics. IP gave Lula Mena and Eva Innocenti the ability to commercialise their products internationally and stand out from other designers whilst empowering women in the local community as breadwinners. Dr Titilayo Adebola during the roundtable discussion spoke about how women-owned SMEs in Africa can be empowered by IP knowledge with a need for more collaboration in the African continental level in raising awareness on IP. However, on the other hand it is understandable why some indigenous communities might be sceptical about protecting their traditional knowledge under IP. This can be because, whilst IP protects a creation or invention, some IPRs exposes details of the product or service to the public. For example, a traditional knowledge protected by patent only gives exclusive right for 20 years and after that, the information disclosed in the patent application becomes available to public use. Some indigenous communities consider their traditional knowledge as part of their heritage which is passed from one generation to another. Therefore based on the type of IPR involved, some indigenous communities might consider IP to be a tool that has the potential to jeopardise their traditional heritage.
According to the study by the European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) which analysed the role of IPRs from over 127 000 European firms from all 27 EU member states and the UK in February 2021; there is a strong link between SMEs business growth and their use of IP. It recorded that whilst less than 9% of European SMEs rely on IPRs, SMEs with IPR portfolio appears to generate 68% higher revenues per employee than SMEs without IPR portfolio. This is a clear indication of the power of IP in SMEs. Whilst this study is limited to statistics from EU member states and the UK, it implies that IP can serve as a powerful tool for business growth for SMEs that use it.
Whilst the importance and benefits of IP for SMEs have been established, the cost related aspect of IP protection was raised in the roundtable discussion as a potential challenge SMEs seeking IPRs might face. This is a valuable concern as some SMEs might not have the finances to seek expert advice from IP practitioners or pay the IP registration fees where needed. However, it is important to note that some IPRs do not require formal registration for IPR protection to suffice like copyright and unregistered design rights. Some speakers in the roundtable discussion, discussed the registration cost difference between trade marks and patents with the latter considered to be more expensive. However, Mr James Brown stated that SMEs should first focus on what type of IPRs is suitable to their business and then go ahead to weigh the pro and cons of the IPRs for their business. He advised that whilst some IP registration might be costly, the benefit of having an inventive idea or product patented for example is more beneficial than exposing the business to unfair competition from IP theft. According to a study from Smart Protection (brand protection company), four out of every five SMEs are victims of counterfeiting on the internet which highlights the need for IP protection. Therefore, it is advised that SMEs who are conflicted on seeking IP registrations as a result of the cost related aspect should weigh the benefit of getting IPRs and its potential to serve as a tool for business growth. Also, SMEs should seek to include IP into their business strategic planning from the get-go to avoid the issue of cost related barrier to building an IP portfolio which could be a strong foundation for the business.
For further information on current SME support institutions in your area, please visit WIPO Global snapshot of SME support institutions and let us ensure the bedrock of our economy is properly supported.
A big thanks again to the Centre for Commercial Law at the University of Aberdeen for organising the Roundtable discussion, Professor Abbe Brown (University of Aberdeen) for moderating the roundtable and to the speakers of the day, Ms Seona Burnett (Vialex Legal Counsel Service), Dr Tshimanga Kongolo (World Intellectual Property Organisation), Mr James Brown (Patents, Murgatroyd), Dr Titilayo Adebola (University of Aberdeen), Mr Philip Hannay (Cloch Solicitors) and Dr Catherine Ng (University of Aberdeen).