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British SMEs will miss out on vital deals because of their IP knowledge gap

British SMEs vented their frustration at the high costs of IP enforcement at an event held in London last week. However, delegates were warned that a lack of IP awareness means that UK small businesses face mounting difficulties in competing on the world stage.

Speaking at ‘Helping UK SMEs succeed in a global marketplace’, Ceri Witchard, deputy head of innovation at the UK Intellectual Property Office (which produced this paper on the topic last April), suggested that IP is too often viewed as a cost centre by UK entrepreneurs, rather than as an opportunity to create value streams. “IP is not simply a legal issue – it’s a means of making money,” she said. “That’s what we need SMEs to learn.”

Was Rahman, an adviser from UK Trade & Investment, highlighted what he saw as a critical lack of understanding on the part of British SMEs when it comes to commercialising their inventions and suggested that this shortage of strategic nous is harming their competitiveness. “There are plenty of very large, consumer-facing companies in China and India that are very keen on working with UK entrepreneurs,” he said. “But all too often, the conversation they have with them is focused on technical features of the invention and making assurances about IP protection, rather than the key issue of ‘how can we make money from this IP?’. Asking a company how it can guarantee it will not steal your IP – and asking whether that can be achieved under UK law, rather than Chinese or Indian law – is not the best way for UK inventors to go about selling their technology.”

However, several delegates argued that the comparatively high costs of enforcement makes the UK patent system inaccessible and ineffective for SMEs – and as a result, many may simply choose to forgo IP protection for their innovations altogether. Perhaps those gripes go some way towards explaining why British companies are conspicuous for the low number of patent applications they make worldwide compared to their counterparts from similarly sized countries; shunning IP in their home jurisdiction presumably leads many small UK businesses to do the same abroad too.

Early-stage businesses have plenty to worry about, and beginning to develop a commercially oriented IP strategy can probably feel like an unnecessary headache – especially when the possible cost of litigating to protect your rights can seem prohibitive. Therefore, it gets put somewhere near the bottom of the list of start-up priorities (or, sometimes, it doesn’t even make the list at all). But in a world where IP is more important than ever to attracting funding, closing deals and creating business value, disregarding it can often amount to ruling yourself out of the game.


Jack Ellis
IAM Magazine
07 February 2013

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IP management, Licensing, IP politics, IP litigation, Patents, IP business

Comments

RE: British SMEs will miss out on vital deals because of their IP knowledge gap

Great comments Jack - good post

When UK investor communities truly understand IP and how to make money from it, then the SMEs will have to take notice - I don't see this regularly happening in the UK at the moment. IP is there to support the business strategy and it has to be an integral part of the whole business. I've seen some very interesting strategies coming out of the emerging markets you mention, especially China. We have a lot to learn from them already, and to think they didn't have a patent system 30 years ago!

Charles Clark, Edwards Ltd on 08 Feb 2013 @ 08:55

RE: British SMEs will miss out on vital deals because of their IP knowledge gap

UK patent litigation costs the same for EVERYBOBY who needs to enforce it in the UK. It does not seem to deter US and German SMEs from wiping the floor with UK SMEs when it comes to investment in IP in Europe and the UK.

Someone with some sense and profile needs to flag this to the SME community in the UK, which has a woefully naive view of IP and its utilisation. I think one of the reasons that UK SMEs focus so much on cost in the UK is because they have no clue about IP value and because they are parochial. They seem to lack ambition in global markets (plenty of studies showing this) have less IP presence outside of the UK and so think they are disadvantaged.

They are not disadvantaged. Just naive and ignorant about the business of IP.

Nicholas White, Tangible IP on 09 Feb 2013 @ 12:27

RE: British SMEs will miss out on vital deals because of their IP knowledge gap

The problem is twofold. The cost of international patenting, and a one market patent is valueless, is extra-ordinarily high. Secondly and more to the point, is that there is no funding in the UK except venture capital which brings many problems, not least of which is alienation of ownership, so we don't grow the 'would be Dysons' we could have.

Just as important is that the very last thing any VC fund wants on any balance sheet is valuable IP. It puts paid to getting the only thing that makes VC worth while, a large chunk of equity for not much money. It is a dreadfully inefficient way of funding almost everything with an alarmingly poor success rate. So SME's don't patent because IP is un-bankable in the UK, in service to VC.

And yet, VC has become the only funding route for State (250 VC funds no grants) or private funding, so the UK has been in serious decline for the last 35 years. VC was 'born in 1980. A City device which has done not a lot less damage to the UK then its banking!

Indeed - strip out oil, the 'selling of the family silver' and debt, and the UK, unless it begins to fund innovation in a renaissance in manufacturing, will inevitably default again as in 1976. You can't go on borrowing at £480,000,000 a day for ever without someone noticing. Then asking 'what's the policy for growth? If answered as is the case 'none' - well that is when markets call a halt to support. It has all happened before.

John Bruce, BruceWorks Ltd on 13 Feb 2013 @ 23:12

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