According to the latest study published by EPO (European Patents Office) and EUIPO (European Union Intellectual Property Office) new European SMEs that protect their Intellectual Property rights (patents, trademarks or designs) have a greater chance of business growth and success than those with no protection.

The reality of our European Union is that 99% of its companies are SMEs and these employ 67% of the workers. These small and medium-sized enterprises represent 57% of the Union’s gross domestic product (GDP) and are undoubtedly the present and future of our economy. Their relationship with innovation means that their growth is somehow linked to its intellectual property (IP) strategy, therefore the report focuses on this aspect.

In reality, only 9% of European SMEs have registered any intellectual property rights, compared with an average of 40% by large companies. Among other findings, this study shows that SMEs who have applied for at least one registration are 21% more likely to experience a subsequent growth period and are 10% more likely to become a high-growth company (HGF). If instead of a single IP right there are several, that is, instead of a single patent there is an interrelationship of patents and trademarks, including industrial designs, then the probability of growth would reach 33%.

HGFs have an important role to play in economic dynamics and, above all, job creation. These companies are those that have had an average annual growth rate of 20% for three consecutive years and had at least ten employees at the time growth began.

The report discriminates between highly technological SMEs and those that are not, referred to as “low-tech”. It considers that the approach to patent protection is logically higher in the former, although it falls short and is sometimes confined to national protection. It therefore concludes that, if protection were to be extended in Europe at least, probability of growth would increase by 110%. With respect to the latter, they would be represented almost exclusively by their trademark registration. However, the study concludes that, if low-tech companies were to apply for patent protection for their inventions in Europe in addition to their trademarks, their probability of growth would exceed 172%.

Despite common believe, Spain is not very different in this sense, and is one of the six Union member states with the fastest growth of HGF companies in recent years.

Undoubtedly, SMEs can also add the benefits of protecting their intellectual property rights to the focus on industrial development, not only for direct exploitation in their products or services or to ensure higher margins, but also to license their technology, establish collaboration agreements, seek collaborators in other markets and of course to attract investment.

At PONS IP we are aware of the importance of protecting our companies’ inventions, institutions and their access to the European and world market. This will not only improve the economy and generate employment, but will also facilitate access to new alternatives to solve society’s day-to-day problems. Keep in mind that the ultimate purpose of patents is to serve as a strategy for promoting innovation.

Like António Campinos, President of the European Patent Office, we believe that authorities at the European and national levels should increase their support of this objective.

The study also reveals the impact of trademark registration on the growth of SMEs, highlighting its relevance within the sets of effective Intellectual Property Rights and their use as opposed to other rights such as patents and designs.

Approximately 18% of the European SMEs considered in this study applied for patents, trademarks or designs or a combination of these rights during the period analyzed, and 14% of the total registered their trademarks.

Therefore, trademarks are by far the most widely used category of Intellectual Property rights.

According to the different industrial sectors, the study indicates that in non-durable consumer goods industries SMEs are 62% more likely to experience high growth if they have registered a European trademark. However, having a national brand is a better indicator of high growth, above 49%, in the consumer durables industries.

And it is highly revealing that SMEs that jointly protect their trademarks, patents and designs are even more likely to grow.

• Increased likelihood of high growth with prior use of a set of Intellectual Property Rights
• Source: Executive Summary EPO-EUIPO. High-growth firms and intellectual property rights

If we add to this the fact that the sets of Intellectual Property Rights (IPR) that include trademarks systematically surpass those that incorporate other categories of IPR, the importance of trademarks in the growth of European SMEs is conclusive.

Ultimately, as the study argues, while “the mere registration of an IP right is not sufficient to trigger growth, it may indicate a company’s greater ability to sustain this growth during the creation, protection and exploitation of its intangible assets”. PONS IP believes that one of the main conclusions we can draw from this report is that having the right protection of intellectual property rights is an important support for the growth of European SMEs.

• Carmen González. PONS IP Trademark Manager.

• Patricia Ramos, PONS IP Patents Director