According to the European Union Intellectual Property Office (EUIPO) and the European Patent Office (EPO), which last February 8 released the results of a new study on the “Impact of intellectual property rights intensive industries in the European Union”, there is still a long way to go as regards companies’ awareness of the advantages of protecting their IP rights. This is particularly true of SMEs, since the report reveals that only 9% of small and medium-sized businesses (SMEs) own IP rights.

This joint report seeks to compare the economic performance of companies that own IPRs with those that do not, in order to demonstrate to the more sceptic businesses, that companies who invest in innovation and in IP rights usually perform better.

Although this study only took into account a few of the IP rights owned by companies – patents, trademarks, designs or models, and did not look at copyrights, which are often unregistered and as a result, more difficult to analyze in these types of studies, the results are quite remarkable. The report shows that investment in IP has a direct impact on company profitability and sustainability, especially as far as SMEs are concerned.

The indicator chosen by EUIPO/EPO to measure the economic performance of a company for the purpose of this analysis was the “revenue per employee”. The table below shows one of the most important conclusions of this study and confirms the positive association between IPR ownership and economic performance: companies owning IP rights have a revenue per employee 55% higher than non-owners. In the case of SMEs, the difference in revenue per employee between IP rights owners and non-IP rights owners is even higher, +68%!

The report reveals that just as continuous innovative efforts are essential to keep a company growing in this new economic stranglehold by the COVID-19 pandemic, sustainable growth can be achieved if these companies protect their innovation and register their IPRs properly.

According to the information compiled by researchers over the years analyzed, SMEs shy away from registering their inventions, trademarks, designs and models. This is mostly due to a lack of understanding of IP rights, but also stems from the fear of having to spend large amounts of money to protect their innovation.

This study successfully explains that, albeit with the usual exceptions, businesses that invest in innovation and subsequently in protecting and registering the relevant IP rights, will have a much better chance of economically thriving and prospering in the following years.

Protecting innovation in a new context

In Portugal, as in numerous other countries, a new lockdown is in place to control COVID-19. Although many companies will continue to struggle to survive through another period of compulsory closure of their commercial establishments, countless others have been using these challenging times to initiate one of the most important metamorphoses of their lives: the transition to digital. Since consumers cannot or are simply afraid of entering stores, companies are finding new ways to stay connected to their customers and to enter the homes of consumers.

Changes that would usually take years to implement are being put in place in a matter of weeks, and projects that were only available to large companies (mostly because of the financial investment involved) are now within reach of SMEs. This has come about due to the proliferation of companies that have changed their business in order to bring more, affordable, digital solutions to their customers.

We see more and more companies resorting to virtual and augmented reality solutions to bring customers into their virtual stores, or who develop new mobile applications that allow their customers to “try” on their products before adding them to the basket. We have also seen factories and industries adapting their business to produce medical protection equipment and to create new solutions to meet the new challenges posed by COVID-19 to millions of people.

This unique environment, which has pushed some companies to rapidly adjust their businesses, has led to an increase in investment in innovation and in the creation of tech solutions.

However, companies embarking on this thriving and fascinating new journey towards digitalization and innovation, also need to find a way to profit as much as they can from these huge efforts to change. Whenever a new solution is developed, a new design or trademark is created. Businesses need to step back and assess whether these inventions / creations can be protected in order to ensure that their investment in innovation and creativity will not be copied by competitors the following day.