How SMEs benefit from patents, industrial designs, trademarks and copyrights

NOWADAYS the question is no longer if innovation is important for a company but rather to what extent.

Innovation is the single most relevant element in fuelling corporations’ competitive advantage and ultimate value creation. It also creates new drivers for value creation.

Multinational companies explore the boundaries of innovation extensively but small- and medium-sized enterprises (SMEs) are catching up.

This is important since SMEs represent a significant part of companies in Zimbabwe and also in other countries in Africa.

In fact, SMEs make up more than 90 percent of all businesses in Zimbabwe and they are drivers of growth and innovation in economies. IPRs have the goal to ensure and foster investments in innovation.

“IP refers to unique, value-adding creations of the human intellect that results from human ingenuity, creativity and inventiveness”

SMEs need to consider adequate protection before engaging with external actors to prevent unwanted knowledge spill overs.

This is typically solved through the application of IP protection rights.

On the other hand, there is only a limited defensibility of such rights in juridical disputes because of high costs and time investments.

In addition, competitors may simply find ways to bypass the secured areas and many others and for most SMEs using and enforcing IPRs is especially challenging because of a lack of financial resources and enforcement abilities.

SMEs are becoming more and more involved in global markets and competition and this means a higher need for protection of products since the threat of competitors and substitute products is potentially worldwide.

The importance of IP protection seems to be gaining momentum as local companies start to protect their products from imitation.

This is illustrated by the increase in rates for patent and trademarks applications.

Recent investment projects and SME financing agreements are evidence of the increasing importance of Zimbabwe SMEs not just for the Zimbabwean economy but also for the African economy as a whole.

It is thus especially important to understand how IPR may help or hinder profitable SMEs in Zimbabwe.

Innovation and firm performance in SMEs

SMEs can use innovation to overcome barriers which result from their size.

Given the pivotal role played by SMEs in the economy, both at a national and regional level, IPRs offer SMEs opportunities for scaling their R&D activities which would be not feasible without protection options.

It may be in the best interests of SMEs to pursue an innovation strategy

Innovations from SMEs come in many cases from an informal nature where industrial designs, trademarks and copyrights play a key role to ensure competitive advantage – beyond patents. These rights give SMEs the opportunity to differentiate themselves from competition with an exclusive right of using a mark or a design.

IP protection and SMEs: patents, industrial designs, trademarks and copyrights

Patents are the most common used statutory IPR but SMEs often neglect using them.

IP protection through patents is positively related to performance in terms of commercialisation success.

Having many patents does not automatically lead to high sales performance.

When patenting is used in SMEs, it has a positive effect on innovation and financial performance. SMEs need to use different strategies for patenting, especially when engaging in innovation.

SMEs differ to large firms in their patenting activities since they patent only the innovations that are likely to be successful.

SMEs face financial and organisational barriers which impede systematic patenting.

The barrier of costliness and lack of resources are reasons why SMEs patent less.

Resource shortages and lack of Intellectual Property management practices are some of the barriers faced by SMEs.

Industrial designs as well as trademarks are important for taking new products to the market. Surprisingly, SMEs only use industrial designs in general to a limited extent even though such design rights are considered to be ideal for SMEs.

Trademarks are a relatively cheap and easily accessible IPR and are comparable to patents in terms of availability and quantity of data while offering an exclusive right for the identification of goods and rights at the same time.

The use of trademarks generates one of the highest IPR revenues after patents.

Trademarks can also be used as an indicator for innovation.

Applying for trademarks is cheaper than for most other statutory IPRs and more SMEs are encouraged to turn to trademarks and use them.

Globally, SMEs account for the majority of overall trademark applications.

The use of copyrights as a tool for saving creative work and “the expression of ideas” is gaining momentum as the rise of ICT in recent years has led to increasing relevance of such protection.

SMEs tend to prefer rights such as copyrights which do not necessarily need to be registered.

In conclusion, local SMEs need to efficiently engage in innovation.

Among other initiatives that could help accelerate the path of SMEs toward benefiting from innovation are relying on IPRs such as trademarks or industrial designs to protect IP in their innovations where applicable.-chronicles

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