SMEs And IP – FSB Reports They Struggle To Protect Their Intellectual Property

A recent research from the Federation of Small Businesses (FSB) has revealed that the price to be paid by UK’s small firms and start up businesses to protect their intellectual property would very often cost them their ability to develop and innovate.

That is because taking care of your IP is costly and time-consuming and businesses often find the instruments provided by the IPO to help secure IP rights too hard to use. As discussed in our Guide For Start Ups Part 1 and Part 2, protecting intellectual property is crucial for the UK’s growing knowledge economy, and it is questionable whether companies should be directed to do the work themselves.

Many companies suffer losses because they do not effectively protect their range of IP rights.

The research surveyed more than 1,000 of FSB’s 200,000 members. Only 32% had actually spent money to secure their IP rights within the last five years, 22% of whom invested more than £5,000. These figures speak about the lack of awareness of SMEs as to the importance of IP protection for their businesses and how much damage it could cause. More importantly, around 25% of the businesses surveyed responded that they have suffered some form of violation or misuse of their IP and a third of them took no action over the theft because of lack of resources and information as to the correct routes and costs involved.

Unregistered rights

Interestingly, most of the infringements outlined are related to unregistered rights like copyright. This underlines the severity of the problem, namely that SMEs and start ups are not aware of the significance of their IP rights for their businesses, hence their passive attitude towards protecting them. They need to be “educated” on these issues and learn how to protect them so they can profit from their intangible assets. Once they realise this is possible, it will then make sense for them to take actions against perpetrators. Currently, only a small portion of those questioned acted upon IP infringement.

The FSB chairman, John Allan has also underlined this issue by stating that ‘The knowledge economy, which runs on innovative ideas and brands, is becoming ever more critical to our economic success. Left unchecked, theft and infringement of ideas, patents and brand costs small businesses and diminishes their appetite to invest in their business, ultimately hampering the UK’s long-term economic growth.’

The proper protection of IP is a “mainstream issue which deserves a mainstream focus”, continues Allan. Therefore, we need effective tools to help secure and protect intellectual property rights.

IPO tools

The Intellectual Property Office has addressed this problem by putting in place various tools and services to deal with the effective protection of IP. The IPO’s mediation service, the IP Enterprise Court’s small claims track and the intellectual property finance toolkit are good examples. And yet SMEs find them too costly or difficult to work with. The FSB is advocating for simplification in order to encourage a proactive approach to IP by SMEs and start ups.

The onus is on the Government to better promote the IP services available and install effective instruments that will enable adequate protection. Back in 2011, the Hargreaves Review suggested that “there are outstanding uses that need to be resolved” Therefore, there is a need for a collective action to resolve this problem.

On the one hand, those who are aware of the strength that IP brings it, should promote this idea persuasively, and, on the other hand, the Government, the IPO and other institutions need to make sure they provide the most effective tools for this to happen. In the end, the benefit will be for all of us – because in UK’s growing knowledge economy, businesses increasingly rely on their intangible assets. And more often than not do these assets turn out to be more profitable than the tangibles.