Opportunities for small and medium-sized enterprises

Using patents and IP effectively

Intellectual property (IP) is often neglected, especially by German SMEs. As a result, much potential remains untapped and opportunities are missed. But why is this the case? In my experience, there are a number of misconceptions. I would like to address the most common ones below.

Just for protection?

"IP is just a protective measure. Our company has been securing competitive advantages for years through targeted research and secrecy."

There are two problems with this assumption. First, there is a fundamental misunderstanding. IP rights are commonly thought of as protective rights. However, IP rights such as patents are prohibitive rights. The owner has the right to prohibit third parties from using the technology in question.
Second, the balance between secrecy and disclosure must be carefully considered. However, secrecy should not be the only choice. First, one should be aware that it is usually not necessary to disclose one's entire know-how in order to obtain an IP right. In addition, IP gives an immense advantage to the "first mover", the first applicant of an IP right for a technology. With specific IP rights, it is possible to occupy a market niche. The "followers", competitors without such IP, have to respect the IP rights and are limited in their scope of action. In addition, the legal costs of defending the market position, e.g. to take action against the IP rights, are usually significantly higher than the costs incurred by the owner to obtain the IP rights.
This dynamic is becoming increasingly important, especially in view of globalization and the large number of Chinese applicants on the European market. Targeted IP rights are an effective means against "copy cats" and create options for action. It is advisable to file IP rights for selected aspects, also in order not to be surprised later by IP of alleged competitors.

Way too expensive?

"Patents are expensive and complicated. In the end, we don't stand a chance against the big corporations."

It is true that small and medium-sized companies will not be able to surpass a large corporation in terms of the number (quantity) of intellectual property rights. But the good news is that they don’t have to. In gerneral, large corporations are no more innovative than small ones. In fact, there are many "frictional losses" in day-to-day business due to the evolved corporate structures. For this reason, the focus in the IP area is often on quantity, so that no innovation is left behind. This is where SMEs can make a difference. By leveraging existing agility and efficiency, a small, high-grade (qualitative) IP portfolio can be built. This way, even with fewer IP rights, a relevant counterbalance can be created. After all, quality beats quantity in the IP sector as well.

Not enough innovation?

"Our company occupies a niche where only incremental and small improvements have been made for years. Therefore, IP rights are not relevant to us."

It is important to understand that an invention may have a very small difference (inventive step) from what is known (prior art). The economic importance is not related to the inventive step. It is possible and quite reasonable to build up a valuable IP portfolio even in niches with long development cycles. Here, too, the first-mover effect mentioned above plays a decisive role. Of course, it is easier to apply for selective IP rights for incremental improvements than to defend against creative IP approaches of the competition.

As a SME, how do you manage your know-how and intellectual property? Are intellectual property rights already an integral part of your innovation management?