- Trade topics
- Intellectual property
The primary function of intellectual property rights (IPRs) is to protect and stimulate the development and distribution of new products and the provision of new services based on the creation and exploitation of inventions, trademarks, designs, creative content or other intangible assets. This is especially important for start-ups and SMEs, as IPRs provide them with powerful tools to compete with incumbent or larger companies.
EUIPO, through the European Observatory on Infringements of Intellectual Property Rights, has published several EU-wide studies and reports that show the significant contribution of IPR to the EU economy.
IPRs also have other benefits for their holders and for the public, including:
Enabling indirect revenues
Where a company protects its products or processes with IPRs, it can derive revenues not only from direct marketing but also from licensing the IPRs to third parties that manufacture and commercialise the products, in exchange for a fee or royalty. These additional indirect revenues sometimes exceed the profits resulting from the direct exploitation, particularly as they do not require additional internal manufacturing capacities.
Such an approach may therefore be particularly relevant for SMEs. It is also important for universities and public research centres, which do not usually have the necessary production facilities themselves.
Promotion of culture
In the creative sectors, such as the publishing, music or film industries, copyright enables authors, performers, producers and other creators to obtain an economic reward in return for their creations and activities, which enrich cultural heritage, enhance cultural diversity, and benefit society at large.
Dissemination of technical information
Even where a company, university or research institution does not intend to exploit its own patented inventions, any member of the public, including researchers, can still make use of patent information.
Patents are the most prolific and up-to-date source of technological information, and contain detailed technical information which often cannot be found anywhere else: it is estimated that up to 80% of current technical knowledge can only be found in patent documents. Moreover, this information is rapidly available, as most patent applications are published 18 months after the first filing.
Searches in patent literature can be conducted by anyone, by using for instance the free-of-charge Espacenet patent database. The latter provides access to more than 60 million patent documents from all over the world, classified by technological area.
There are good reasons to search patent literature:
- Avoid duplication of R&D efforts and spending (it is estimated that up to 30% of all expenditure in R&D is wasted on redeveloping existing inventions).
- Find solutions to technical problems (most patents – around 85% – are no longer in force, making a vast number of inventions available for free).
- Gather business intelligence, as patents not only reveal technological information, but also make it possible, at a very early stage, to identify potential competitors, customers and partners, or to monitor competitors' innovation strategies.
Facilitating technology transfer
Patents are often not just a convenient means of protecting an invention, but they also describe in a very accurate way technologies which are the subject of technology transfer and similar agreements (licensing, assignment, etc.). This 'technology packaging' / trade facilitation function justifies that patents have sometimes been considered as the 'currency' of the knowledge-based economy. To some extent, the same reasoning also applies to IPRs other than patents.
'Open source' relies on IPR
Open source mechanisms are popular in sectors such as software (e.g. General Public Licences or GPLs). While the common perception is that such mechanisms are characterised by the absence of any IP protection, it is worth noting that a typical GPL actually relies on IPRs, as it is typically a copyright licence that remains valid as long as certain conditions are complied with. Flexibilities enjoyed by the licensee must be passed on to subsequent users, even where the software is modified.
Collateral to obtain financing
As intangible assets, IPRs often play an instrumental role for SMEs (including start-ups and spin-offs) trying to convince third parties to provide them with financing (such investing equity or granting loans). For the financial sector, the valuation of a patent, for instance, is crucial to valorise intangible assets, especially for knowledge-intensive SMEs.
Providing guarantees regarding the quality and safety of products
Many counterfeit products do not comply with the applicable safety standards, and put the health of safety of Europeans – including children – at risk (for instance, where vehicle spare parts, toys or pharmaceutical products are concerned). Enforcing IPRs such as trademarks and designs with respect to such products prevents their entry into the market and ensures that consumers can rely on the quality and safety of genuine products made by the original manufacturer.