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Why IP rights?

More income, higher salaries: Companies with their own IP rights are better off - SMEs in particular benefit

Companies that own intellectual property rights earn more: as a recent study shows, companies that own patents, designs or trademarks generate on average 20 percent higher revenues per employee than companies without such rights. Employees also benefit: Companies with their own IP rights pay on average 19 percent higher salaries.

The study IPR and Business Performance in the EU (2021) by the European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) once again proves the positive relationship between IPR and economic performance. The better the portfolio of IP rights, the stronger the economic performance of a company: enterprises with patents generate on average 36 percent higher revenues per employee and pay 53 percent higher wages. Owners of designs and trademarks also show significantly stronger economic performance than comparable companies without such rights.

Double income possible for SMEs

The study ( available on the EPO website) hows that small and medium-sized enterprises (SMEs) benefit most from owning IP rights: SMEs with their own IP rights record 68 percent higher revenues per employee compared to similar SMEs without such rights. SMEs that own both patents and trademarks and designs even generate almost double (98%) the revenue per employee compared to similar companies that do not own any of the three IP rights.

However, as the study notes, less than 9 per cent of SMEs in Europe own any of the three IP rights under consideration. By contrast, the corresponding figure for large companies is almost 60 percent. For SMEs, intellectual property rights thus offer enormous, unfortunately often untapped potential.

Good for growth

SMEs applying for patents, trade marks or designs are also more likely to become high-growth companies than other SMEs. This is shown by the current joint EPO-EUIPO study with the title High-growth firms and intellectual property rights: IPR profile of high-potential SMEs in Europe (Mai 2019). SMEs have a verifiably greater probability of developing into high-growth companies if they have filed at least one IP right. (The study is available on the EUIPO website.)

So why is it that SMEs are more reluctant when it comes to IP rights? The study of the Fraunhofer Institute for Industrial Engineering IAO Professionelles Patentmanagement für kleine und mittlere Unternehmen in Baden-Württemberg (2,36 MB) (in German) (Stuttgart 2015) mentions among other reasons a lack of information on IP rights and on how to obtain advice and support. The purpose of our information pages specifically aimed at SMEs is to provide help in this respect.

Why intellectual property protection is important

According to the SME Scoreboard 2016 (EUIPO study on intellectual property), only nine percent of all SMEs protect their intellectual property. Why is that so? The Fraunhofer Institute for Industrial Engineering IAO provides an answer: The study Professionelles Patentmanagement für kleine und mittlere Unternehmen in Baden-Württemberg (2,36 MB) (in German) (Stuttgart 2015) explains the reasons why SMEs tend to react rather cautiously when it comes to securing industrial property rights. Above all, it is a lack of knowledge that becomes a problem. Companies seem to have too little information on industrial property rights and hardly know how to obtain advice and support. In addition, they often fear that costs will be high and that obtaining IP protection will tie up many staff resources without even knowing what the actual costs and work involved would be.

In fact, expenditure on IP rights is much lower than expected. The amount of work involved is also moderate - provided you know how it is done.

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Picture: istock.com/avdeev007

Last updated: 2 March 2022