SMEs, protect thy IP

If you’ve ever owned a small- or medium-sized business, you will know that outperforming your big corporate counterparts takes some doing. You have to formulate novel solutions, create niche markets and demand for your products and strive to distinguish your products with bold and memorable branding. So a small to medium enterprise (SME) should make innovation part of its development strategy.

 A 2017 World IP Organisation (WIPO) report estimates that about one third of the value of manufactured products sold around the world is attributable to “intangible capital” and yet, many SMEs forego protecting, managing, and enforcing their own IP.

“Fundamentally, every commercial product or service may be associated with a portfolio of intellectual property that could give it a competitive edge. Unfortunately, SMEs have limited knowledge of IP and its potential to impact on their business,” says Dina Biagio, Partner, Spoor & Fisher.

This is not due to a lack of unique products in the South African marketplace or a lack of originality in branding. Local companies are known for their innovation and for finding clever ways of overcoming challenges. Think of the way that products have evolved in an African environment, from mechanisms for conserving water to using mobile telecommunications to transfer cash to a family member far away. Great brands, like Pikitup, Hippo, Kulula, Bos and the Investec Zebra are distinctive and have a wonderfully African character.

“SMEs understand that to differentiate themselves from competitors wherever they are in the world, they need to focus on designing unique products and services and on choosing memorable and distinctive branding. It is critically important to educate business owners on the importance of safeguarding their IP not only to prevent competition, but to get the best possible commercial impact from this ownership.” Says Biagio.

Just consider the potential business opportunities in selling the IP to a larger business or even licensing its use in the broader industry sector in which the SME is involved. Furthermore, an SME needs to understand IP so as not to fall foul of the law by infringing (or misusing) the IP of others.

For SMEs, the three most important IP rights revolve around patents, trade marks, and know-how.

A patent is the exclusive right granted to an inventor to deal in an invention for a limited time in exchange for the public disclosure of the invention. A patentee has the right to stop others from manufacturing, selling, using, marketing or importing the patented invention, without permission. If you have a great idea for a unique product but you don’t go through the process of protecting it with a patent, once the product is known in the market, you will have no legal foot to stand on if a competitor copies your idea,” cautions Biagio. Of course, this also means an SME will need to go through a process to determine whether the invention is patentable in the first place.

A trade mark in turn, is a name or symbol that a business uses in relation to its products or services to distinguish them from others. Think of the name of your favourite sports goods or the logo’s and symbols used by retailers to attract custom. Having a trade mark registration means the owner can prevent others from using a mark that is confusingly similar to their registered trade mark, for similar goods. “Many people assume that the fact that a trading name, slogan or logo is used by them, means that they would be able to prevent others from also doing so, but it can be difficult to do so if the mark is not registered with the CIPC. Before registering the mark an SME should establish if the mark is available for registration in that class” says Biagio.

Finally, as the name suggests, a trade secret is any algorithm, process or methodology that is generally not known outside of the business. Unlike patents, the value of a trade secret lies in the fact that it is not generally known by others and is kept secret. For example, a business could use an algorithm embedded in software or a particular manufacturing process, which gives it an advantage. Also, as patents typically last only 20 years, a trade secret could have value until it is publicly disclosed or independently arrived at by a competitor, for example.

“IP provides a protectable interest that can be used as a springboard to generate income that would not otherwise be possible. Licensing IP can be a business strategy on its own. In technical fields, markets or territories where an SME is unable to be competitive, it may still be able to generate a revenue stream through licensing. An SME should continuously review its IP portfolio and assess the market for licensing opportunities” concludes Biagio.

Date published: 27 June 2019
Author: Spoor & Fisher

Tags: sme small medium enterprise ip intellectual property