One-third of EU SMEs suffer from IP infringement

Bilateral negotiations followed by court proceedings are the most common ways EU-based small and medium enterprises (SMEs) are solving intellectual property right (IPR) disputes.

A survey of nearly 9,000 SMEs found that almost one-third had experienced infringement of their IPRs. This proportion increased with the size of the business, with medium-sized firms affected most (39 per cent) and micro SMEs suffering least (24 per cent).

The top three rights for infringement are trade marks, patents, and designs. Loss of turnover, damage to reputation, or loss of a competitive edge were the main consequences reported for such infringements. However, 12 per cent of SMEs said they had taken no action when infringement had occurred.

Costs and lengthy procedures were the key reasons as to why SMEs refrain from launching litigation. Expensive court fees (58 per cent) and legal fees (53 per cent), coupled with the risk of losing and paying compensation (41 per cent) were some of the specific reasons cited.

Some 60 per cent of IPR-owning SMEs said that protecting their innovation had been positive for their business, notably increasing their reputation and image of reliability, as well as strengthening long-term business prospects.

The companies surveyed were more likely to register internet domain names (47 per cent) and use trade secrets (42 per cent) than opt for any other form of protection measure.

Preventing others from copying their products or services (79 per cent), followed by better legal certainty (74 per cent), and an increase in the value and image of the SME (73 per cent) are the top three reasons why SMEs register IPRs, the survey found.

Of the businesses questioned that had not secured their IP rights, 35 per cent said they saw no benefit in availing themselves of protection measures. Other reasons given include: lack of knowledge about registration procedure (13 per cent); the complexity and cost of registration (8 per cent); and court proceedings in cases of infringement (5 per cent).

However, almost half of those interviewed did not experience difficulties when registering IPRs; when difficulties did occur, cost and length of procedure were the most common problems encountered. By contrast, alternative measures, such as domain name registration, were described as 'very easy' to navigate.

Lawyers and accountants were found to be the two most important sources of advice for IP matters, although, while large companies prefer lawyers, SMEs with no IPRs are just as likely to consult accountants as they are legal professionals.

The executive director of the European Union Intellectual Property Office (EUIPO), António Campinos, said: 'SMEs represent 99 per cent of all business in the EU, and are the backbone of Europe's economy. Therefore, we need information which clearly shows the reality of the IP environment for innovative EU SMEs - why they seek IP protection and what barriers they face. We also want to get their direct feedback as to how those problems can be overcome.'

In 2015, the EUIPO published its Intellectual property rights and firm performance in Europe report, which showed that large companies are more likely to own IP rights than smaller companies.

Some 40 per cent of larger firms have registered rights, compared with 9 per cent of SMEs. The report also showed that SMEs owning IPRs have over 32 per cent higher revenue per employee than those that do not own such rights.