Intellectual Property: A must for Small and Medium Enterprises development

World IP Day

Intellectual Property (IP) is simply defined as the creations of the mind. A more encompassing definitions view IP as legal rights which result from intellectual activity in the industrial, scientific, literary and artistic fields (WIPO, 2004) or a group of legal principles that regulate and protect the use of different sorts of ideas and insignia.

Many Small and Medium Enterprises (SMEs) fail to acknowledge that their most valuable business assets are ideas “creations of the mind” on which they are founded and built. Only to realise their true value when a competitor begins to exploit the same idea thus reducing their business value and competitive advantage. One of the quick thoughts that comes to the SME’s mind when IP protection is mentioned is that it is expensive and complicated. Anything that involves lawyers is generally considered even more expensive and technical.

However, if the truth is to be told, what usually turns out to be more expensive is being driven out of business because of failure to protect your IP. This article provides a brief overview of what IP an SME can protect, ways of doing so, and some of the challenges that may be faced in the process.

It is imperative that SMEs understand that in the 21st-century business assets are now divided into two categories physical assets and intangible assets. Physical assets have always maintained their traditional presences in organisation financial statements and are easily protected through insurance and a combination of physical and security policy mechanisms. As the world is moving towards a knowledge economy, intangible assets “IP assets” are beginning to find their way into financial statements while being protected by various legal instruments. Thus the SME needs to be able to identify and know which IP assets he owns. The IP identification can be revealed through an IP Audit.

IP Audits

This is an exercise aimed and identifying all the IP produced and owned by the SME. The exercise helps to identify what assets are being used and where they are being used by the SME. If they are not being used, it becomes possible to know why is it not being used or how can it be used. A well carried out IP Audit enables the SMME to have a complete record of all its IP assets (Parnami & Ailani, 2011). After identifying the complete IP portfolio, the SME can be able to evaluate what his assets are worthy of. Defining your intellectual assets will help you determine what needs to be protected and how it is to be protected. While this exercise may need expert guidance to be done properly a lot of quick guides are available on the internet to assist the SME in conducting the exercise if there are limitations in access to expert services.  

IP Training

The importance of IP knowledge acquisition is of paramount importance to SMEs. One of the limiting factors when it comes to IP management for SMEs is lack or limited knowledge (UK IPO, 2012). This is compounded by the fact that IP is not taught in schools, with limited course offerings available in a few universities around the globe. The World Intellectual Property (WIPO)  Academy, African Regional Intellectual Property Organisation (ARIPO),  National Intellectual Property Offices, and various other organisations have IP training academies that provide training to SMEs via distance learning, workshops, seminars, and webinars which SMEs can enroll for. Some of the training is available free of charge and information relating to this is available on their websites. In terms of training, it critical to note that SMEs do not necessarily need detailed knowledge of IP, but a basic understanding to allow them to identify and appreciate the value and risks in the IP they own and use (UK IPO, 2012).

 

The IP Assets

With sufficient knowledge, an SME should be able to identify the following IP assets that may be found within his business.  

  1. A patent is an IP asset in which an exclusive right is granted for novel and industrially usable inventions. A patent gives the SME the right to decide how and who uses the invention. To be granted patent protection one has to disclose technical details about the invention in a patent document. 
  2. A trademark is a word, slogan, phrase, symbol, or design that helps to identify and distinguish a business, products, or services from those provided by others. Trademarks aim to protect the identity of what you own as distinct from the identity of what is owned by someone else. Popular examples of trademarks include Coca-Cola, FIFA, Google, Puma, and KFC among others.
  3. An industrial design protects the ornamental or aesthetic “feel good” aspect of an object.  Simply put it protects the appearance of a product. A design may consist of three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns, lines, or colour.
  4. Copyrights are IP assets that relate to the rights of creators for their literary and artistic works. Items that are protected by copyrights include books, music, paintings, sculpture, films, computer programs, databases, advertisements, maps, and technical drawings.  It is important for the SME to note that copyright does not protect procedures, processes, ideas, and formulas.
  5. A trade secret is confidential exclusive knowledge that is not known or reasonably ascertainable by others that gives your business a competitive and economic advantage. One of the world's best-kept trade secrets is the formula for creating the Coca-Cola soft drink.  Trade secrets may be compilations, designs, formulas, instruments, methods, practices, processes, protocols, patterns, recipes, or tools. Items protected by trade secrets do not have formal government protection, therefore, each business that has a trade secret must take measures on its own to guard its own trade secret. 

 

One key aspect for SMEs to note is that IP rights are territorial.  The three main protection routes used to file for IP protection are the national route which is done by filing for protection through the National Intellectual Property Office. The regional route, which is filing for IP protection using regional intellectual property offices like ARIPO, OAPI, and EPO.

Lastly, the international route which is filing for protection through services offered by WIPO, e.g. the PCT route for patents or the Madrid system for trademarks. Each IP filing route has its own pros and cons which the SME has to interrogate.

 

IP Policy

This has always been thought to be a preserve of large cooperation’s. SMEs hide behind the excuse of lack of skills and capacity to formulate such. Yet a lot of IP tool kits from WIPO and other online sources exist that provide guidelines for formulating or carrying out exercises related to IP policy formulation. The policy formulation is largely guided by the assets in your portfolio as identified from the IP Audit. Once in place, the IP policy guides the SME on how to protect, exploit and enforce his IP rights.

IP enforcement

It’s imperative that as you are using your IP you should monitor and ensure that it is not being violated. The IP value chain is create, use, monitor, and enforce. Use can either be direct or indirect, so is enforcement, you can assign people to monitor and enforce your IP for you.

 

The key requirement for IP protection by SMEs 

  1. Support in the establishment of policies and strategies
  2. Training and raising of awareness
  3. Establishment of IP clinics to offer regular advice and technical assistance
  4. Will power by SME to protect their IP
  5. Practical skills to file for IP protection
  6. Filing and financial support in some instances

 

Challenges

SMEs face difficulties when using the IP systems, this is large, due to some of the following reasons:

  • The lack of knowledge in terms of what to protect and how to protect. Expert guidance is sometimes required on the best form of protection to take versus lengthy processes and cost. 
  • High IP costs also pose a challenge for SMEs. These are in terms of application and publication fees, legal advice, translation costs, and the maintenance fee associated with obtaining IP protection which acts as a barrier for SMEs. 
  • The application process for certain IP rights is lengthy and time-consuming which prohibits SMEs from obtaining protection. 
  • Failure to enforce rights due to prohibitive litigation  processes in costs and time consumption

 

Conclusion

The importance of IP protection for SMEs is apparent. A combination of factors which include training, creation of IP clinics for SMEs, creation of accessible IP centres by the governments, and raising awareness about the benefits of IP registration and protection for SMEs would go a long way in increasing the market and business value for SMEs.

 

Article written and submitted by:

Luxmore Chiwuta, PhD Candidate, University of Cape Town

chiwutal@gmail.com, +263773578278

References 
Parnami, N., & Ailani, S. (2011). The Intellectual Property Audit: A Guide to Small and Medium Enterprises (SMEs). SSRN Electronic Journal, 2009, 1–11. https://doi.org/10.2139/ssrn.1289189
UK IPO. (2012). From ideas to growth : Helping SMEs get value from their intellectual property (Issue April).
WIPO. (2004). WIPO Intellectual Property Handbook (Second). WIPO.