Benchmarking National - PRO INNO Europe

Care must be taken that statements and complaints by SMEs are interpreted
with caution; indeed, it may be that SMEs may – on average – overestimate their
know-how and resources. It could also be that the complaints about the high costs
are exaggerated, and that awareness of IPR in general is lower than anticipated by
the SMEs. It should also be recalled that the sample of SMEs providing the
information is biased towards those who make use of IPR support services and,
hence, are likely to have a greater awareness than those who do not. To put this in
the right context, it might prove useful to analyse how IPR is treated in large
companies.
3.5 IPR in large companies –
The case for a strategic approach to IPR
IPR in large companies is hard to analyse in detail because it is generally viewed as
proprietary and confidential, involving as it does the core know-how of a company.
As a matter of fact, anecdotal evidence suggests that public statements on the IPR
policy of a company may also include, at least in part, misleading information, in
order not to give potential competitors hints about what the company is doing.
However, some general characteristics of how large companies treat IPR, and
lessons small firms can learn from their large counterparts, can still be derived from
various studies and presentations.
First, one has to notice that large enterprises seem to be faced with very much the
same challenges as SMEs. Costs are a considerable factor, and court trials are also
mostly seen as a measure of last resort (Matthews et al., 2003). Notwithstanding
the different extent to which SMEs and large scale enterprises (LSEs) are actually
subjected to the cost issue, one might still wonder why companies of all sizes
engage in IPR protection at all.
The answer to this question is certainly not straight-forward, and calls for a more
detailed analysis regarding the benefits of using IPR. Traditionally, and as stated
before, IPR is used as means of protection. However, with growing importance of
IP in general, the usage areas of IPR have become much more manifold:
� Protecting against copying: IPR may be used in the traditional way as an
insurance premium to protect against imitation and copying.
� Scaring potential competitors off: IPR is also used in order to signal
competitors that they have to expect trouble if they try to enter a market with
products similar to the ones protected by patent.
� Creating reputation: IPR could be also used to underline the competence
and innovativeness of a firm. This is especially important for two areas: First,
for securing financial funds. Second, for marketing in general. Using IPR for
securing financial funds may be highly relevant for SMEs, too, especially for
start-ups. For the latter, patents may help in negotiations to secure venture
capital funds for a project that would otherwise be treated as non-existent.
� Forcing to design around: Firms which try to enter a market dominated by
a patent-protect product may need to design around, which is mostly coupled
with a number of disadvantages (higher development costs, less usability, loss
of time, etc.).
� Generating income: Patents may be used to directly generate income. This
is done by using licensing agreements. Under such an agreement, the licensee
obtains the right to use the patent against payment of a royalty to the patent
holder/licenser.
� Creating freedom to operate: As court procedures are costly and lengthy,
two firms might agree to use each other’s IPR for free and refrain from litigating
for individual patent “infringements”. Such mutual licensing agreements are
denoted by the term cross-licensing.
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SMEs IN THE IPR WORLD