Top-performing SMEs protect their industrial property

  A study has shown a link between industrial property titles and the growth of SMEs. Indeed, this study, published in 2019, shows that companies that own industrial property rights are more likely to experience high growth than those that do not protect their assets. This study by economists from the European Patent Office (EPO) and the European Trademark Office (EUIPO) is based in particular on data collected between 2005 and 2010, evaluating the growth of European SMEs. We summarize here the conclusions of this study:  

1. Better growth for SMEs with industrial property rights

The study shows that Firms that have registered at least one industrial property title (patent, trademark and/or design) are 21% more likely to grow than others. There was an increase of 9 % for SMEs with one or more patents, and 13 % for those with at least one trademark. The figures increase even more for SMEs which have decided to obtain a European industrial property title (instead of or in addition to a national trademark). Thus, the registration of a European trademark can serve as an indicator for a potential investor. In particular, it demonstrates the company's willingness to expand its activities internationally.  

2. Trademark registrations: key indicators for SMEs

Companies active in the field of consumer goods are particularly encouraged to register trademarks.. Indeed, the study reveals that SMEs producing consumer goods will grow faster than their competitors if they have registered at least one European trademark. This trend is reinforced for companies producing non-sustainable consumer goods. Thus, while stable and traditional markets are generally dominated by large companies, this is not the case for markets subject to technological uncertainties. Indeed, in these turbulent markets, we observe that innovative SMEs will be more efficient because they are very flexible. They do not have the formal structures or cumbersome decision-making processes of large companies. Moreover, SMEs and/or start-ups generally explore new niches. In this way, they respond to new customer demands that are not satisfied by the current market.  

3. Multiplying the number of industrial property titles: a winning strategy

Don't put all your eggs in one basket! The study shows thatan SME has up to 33 % of additional chances of becoming a high-growth company if it owns a "bundle" of industrial property rights. This is the case if the company owns a trademark, a patent and a design at the same time:

  Unfortunately, the multiplication of titles requires a significant commitment of resources, which can exceed the financial possibilities of SMEs. But the study points out that industrial property rights can also be used to attract investors. In the US, for example, start-ups with patent-backed loans tend to raise more equity than those without. Also, other studies have found that investors are more likely to finance companies that plan to market their products through trademark registration; and. Finally, it is important to remember that industrial property titles can survive the bankruptcy of a company. Many SMEs thus resell their patents or trademarks before ceasing their activity. This provides additional security for investors.  

Conclusion

Trademarks, patents and designs are thus indispensable assets for the development of SMEs.. Rather than focusing on the short term, companies must anticipate their growth. They need to organize an effective IP strategy as early as possible. EPO and EUIPO economists also advise investors to conduct in-depth analyses of the rights portfolio of SMEs. This analysis will help to assess the adaptability and growth capacity of companies. Yamark's team specialises in assisting small and medium-sized businesses. Do not hesitate to contact us for any information on industrial property.