IP opportunities for small and medium sized businesses

Figures released by the House of Commons Library in December last year, show there were 5.7 million SMEs (Small and Medium Enterprises) operating in the UK. This means that 99% of all UK businesses fit this category. 

Despite the many geo-political and macro-economic pressures that exist today, the UK is still a thriving hub for small and start-up business. However, a report from the European Union Intellectual Property Office (EUIPO) said that in 2015, only nine per cent of European SMEs registered IP Rights (IPRs) of any kind. 

This prompts me to ask: are SMEs reluctant to protect their IP?

Barrier to entry

The UK has always been a place of innovation and invention. However, there are various hurdles within the UK’s intellectual property landscape that could deter SMEs.

Registering IP can be expensive. Fees need to be paid to the local intellectual property office where protection is being applied for. If companies are seeking more widespread or global protection then further fees are required for the additional jurisdictions to be covered – and the costs quickly add up. Legal support and counsel is critical to ensuring a successful outcome to this complicated process but, of course, adds further cost. Companies often face thousands in costs to protect IP in one country and tens or hundreds of thousands to ensure worldwide protection.  This is not to mention the investment in time required.

Furthermore, the legal requirements for IP protection vary across different jurisdictions. Many European countries and the US provide initial assurances against infringements whereas in the UK, such assurances are virtually non-existent. As a result, many SMEs have become increasingly secretive and reluctant to share their ideas with others, potentially leading to a reduced opportunity for collaboration and fund raising.

Businessman by window

Advice for the future

There are government schemes that go some way to incentivising IP registration from SMEs. R&D Tax Credits are offered by HRMC to UK SMEs able to demonstrate technological innovations. There is also the ‘Patent Box’, which entitles companies to reduced corporation tax on patented inventions.

To address the elephant in the room, both schemes may need to be reworked in the event of Brexit. However, rather than dismissing them, my advice to companies would be to examine them carefully. Getting to grips with these incentives and your IP rights will make navigating the path to protecting IP much smoother.

The most prudent advice to SMEs approaching IP applications is do your research. There are numerous resources to assist with this including: a general advice government portal, The Chartered Institute of Trade Mark Attorneys and the EUIPO has a register of representatives for IP claims in Europe.

In summary

A popular statistic in business is that a companies’ unique IP makes up between 45 and 75 per cent of its overall value. Increasingly innovation is being driven by smaller businesses and with SMEs making up the vast majority of UK business, there is a real opportunity for a huge surge in the innovation economy if businesses can see the value in ensuring their inventions are protected. 

Simon Webster, CEO of CPA Global