Why is IP protection important for EU SMEs?
Small and medium-sized enterprises (SMEs) are the backbone of the EU economy. They represent 99 % of all businesses in the EU, account for more than half of Europe’s gross domestic product (GDP) and employ about 100 million people. The positive association between economic performance and ownership of intellectual property rights (IPRs) is particularly strong for SMEs.
SMEs that own IPRs generate 68 % higher revenue per employee than SMEs that do not own any IPRs at all, according to the latest study published in 2021 by the European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) on IPRs and firm performance in the EU . As the study shows, IPR protection has become crucial to the success of SMEs, and it is thus key for SMEs to be aware of the value of intellectual property (IP) and of the best ways to benefit from it.
IP relates to intangible assets, which comprise intellectual and industrial property. IPRs can be protected by law under patents, trade marks, industrial designs, copyright, plant variety protection, but also via trade secrets, unfair competition, civil and criminal law.
SMEs can benefit from IP protection and seize business opportunities globally if their IP portfolio is managed effectively. A strong IP strategy also helps SMEs attract funds from potential investors, enabling them to internationalise in emerging markets. According to a joint report between the EPO and the EUIPO in 2019, IPR-intensive industries generated approximately 45 % of the total GDP in the EU, worth EUR 6.6 trillion. Those sectors also accounted for most of the EU's trade with the rest of the world, comprising 96 % of goods exported from the EU.
IP protection is also crucial to fostering innovation by providing a return on investment on Research and Development (R&D). Furthermore, a well-prepared IP protection strategy will help SMEs prevent others from free-riding on their IP. Importantly, an SME, being the legitimate owner of IPRs, will have recourse to enforcement actions to stop an activity infringing their IPRs.
IP protection is the key to success of EU SMEs expansion in the SEA region
Southeast Asia (SEA) region is a promising destination for EU SMEs, thanks to their open policies and incentives for attracting foreign investment. The region is a thriving economy with a combined GDP of USD 3 trillion in 2018 (the 5th largest in the world) and a population of 649.1 million people.
The SEA region represents the EU’s 3rd largest trading partner outside Europe (after the US and China) with more than EUR 237.3 billion of trade in goods in 2018. The EU is the SEA region’s 2nd largest trading partner after China, accounting for around 14 % of SEA trade. The EU is by far the largest investor in the SEA countries with the Foreign Direct Investment (FDI) stocks in the SEA region accounting for EUR 337 billion.
To date, the EU has two Free Trade Agreements already in force with Vietnam and Singapore, respectively - EU-Vietnam Free Trade Agreement (EVFTA) and EU-Singapore Free Trade Agreement (EUSFTA) - and is negotiating a comprehensive economic partnership agreement with Indonesia. These FTAs facilitate market access through the elimination of customs duties and non-tariff barriers from both sides, as well as stimulating investment flows. Each Agreement includes a comprehensive IPR chapter with commitments to enhance IPR protection and enforcement in line with international standards.
The report of the Organization for Economic Co-operation and Development (OECD) and the EUIPO published in 2019 shows that companies suffering from counterfeiting and piracy continue to be primarily registered in Europe. China continues to be the biggest origin of counterfeit and pirated goods, but some of the major SEA economies are also listed among the top 25 provenances. As the study shows, the exposure of EU SMEs to IPR infringements in the SEA region is high; and EU SMEs should consider this when preparing their IP strategy.
In the COVID-19 context, IP infringement in the online environment appears to be increasing in SEA countries, via e-commerce and social media platforms, due to the lack of effective regulations addressing online IP violations. IP owners are advised to seek registration for protection of their IPRs in each country of interest. Registration at the IP Offices and in the customs registers may contribute to successful enforcement.
Stay tuned to IP Key South-East Asia and South-East Asia IP SME Helpdesk for success stories of EU SMEs operating in Southeast Asia and how IPR protection supports these businesses during the pandemic.
How is the European Union supporting EU SMEs in SEA?
On top of bilateral trade agreements introducing commitments for enhanced IPR protection and enforcement, the EU counts on IP Dialogues and IP technical cooperation programmes to support EU businesses trading and investing in the region, including SMEs.
The European Commission (EC) launched, among others, the following initiatives to support EU SMEs.
IP Key South-East Asia (website here)
IP Key South-East Asia (IP Key SEA) is a four-year programme funded by the EU and implemented by the EUIPO aimed at supporting IP rights protection and enforcement across South-East Asia, with a view to creating the appropriate legal and economic environment conducive to trade and investment in the region. By contributing to the enhancement of IP frameworks and implementation of best practices, IP Key SEA aims to ensure a level playing field for both local enterprises and EU stakeholders. IP Key SEA is one of three IP Key flagship programmes that are being implemented by the EUIPO, together with IP Key China and IP Key Latin America.
South-East Asia IP SME Helpdesk (website here)
The South-East Asia IP SME Helpdesk is an initiative of the EC to support EU SMEs to protect and enforce their IPRs in SEA. All services offered by the Helpdesk are free of charge.
In a nutshell, the Helpdesk’s services cover (i) Enquiry Helpline (tailor-made confidential advice to EU SMEs on IP related to SEA within 3 working days), (ii) IP Guides and Country Factsheets and (iii) Onsite and online Trainings. The South-East Asia IP SME helpdesk is part of the IP SME Helpdesk initiative which EU/COSME SMEs and researchers participating in EU-funded projects both to protect and enforce their Intellectual Property (IP) rights in relation to Europe, China, India, Latin America and South-East Asia.
Other incentives for EU SMEs
EU SMEs now can apply for assistance to protect their IPRs under the following programmes:
- The Ideas Powered for Business SME Fund: a 20 million Euro grant scheme created to help SMEs develop their IP strategies and protect their IPR, at national and EU level (more details here).
- Horizon IP Scan: Helping SMEs manage and valorise IP in research and innovation collaborations (more detail here).
IPR protection in SEA is crucial for EU SMEs to ensure a safe ground for their business activities. Without protection, enforcement of the IP rights will not be possible. Therefore, it is highly advisable for EU SMEs to make an effective use of the various EU initiatives to set up their IP strategy before expanding to the region. Get in touch with the SEA IP SME Helpdesk (firstname.lastname@example.org) and IP Key SEA (IPKEY-SEA@euipo.europa.eu) to learn more about the available tools.
IP Key SEA & South-East Asia IP SME Helpdesk