The importance of IP for SMEs in the Knowledge Driven Economy Lagos 17 th June 2010 Marina Sauzet Consultant SMEs Division

Agenda Importance of Intangible assets in the knowledge economy Relevance of IP for SMEs SECTION TITLE

Importance of intangible assets in the Knowledge Economy Transition in the economy ICT revolution Internet Globalization of economic activities Development of a service-based economy Data, information and knowledge have become more important than land, labor or capital as a factor of production. Warehouses and factories replaced by software and innovative ideas

Importance of intangible assets in the Knowledge Economy Industrial Economy Product Focused Market Commercial strategy availability (absolute) price Managerial focus: Internal Efficiency production capacity cost Service Focused Market Commercial strategy variety subjective customer value Managerial focus: External Effectiveness innovation customer relations Knowledge Economy subjective values/ effects Investments in intangibles

Importance of intangible assets in the Knowledge Economy MATERIAL REPUTATION DESIGN BRAND INTANGIBLES ASSETS Suitcases from local Dep. Store Suitcases Louis Vuitton store Low Price: Quality?High Price: Quality Example

Example: 2009 Brand Value ($m) Source: Interbrand 2009 Importance of intangible assets in the Knowledge Economy Source: 68,734 56,647 47,777 34,864 32,275 60,211

IP in the Knowledge economy Intellectual Property (IP) refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce IP is around us: every product or service is the result of innovation and creativity.

IP in the Knowledge economy Invention of CD player protected by patent Brand on CD player protected by trademark Design of CD player protected by industrial design Music played on CD player protected by copyright

Relevance of IP for SMEs Every SME is concerned about IP: -Almost every company as a trade name -SMEs have to distinguish their product with one or more trademark (s) - Most SMEs have valuable confidential business information (customers lists, sales tactics -Some may have developed creative designs -Some may have invented or improved a product or service -Some may have a product with a specific quality due to its geographical origin If so, how to prevent the use of these key assets by others?

Relevance of IP for SMEs Innovative products/processes Trade name Goods of a given quality due to its geographical origin Creative designs Cultural, artistic and literary works Confidential business information Patents or utility models Trademark, Collective mark, Certification mark Geographical indications Industrial design rights Copyright and related rights Trade secrets INTANTIGLE ASSETSIPRs With Intellectual Property (IP) offers a legal protection and grants exclusive rights to transform intangibles assets into business assets

Relevance of IP for SMEs 8-year-old son disappeared from his school bus queue Jumped on a plane home from New York City to Atlanta Son had sneaked back into school. He didnt want to pee on himself Patents and Utility models Innovation - improvement of functional aspects or fabrication process of the product: Patents, Utility Models If new, not obvious and has industrial applicability : exclusive right to prevent others from using the invention for a maximum period of 20 years

Relevance of IP for SMEs Trademarks, Collective Marks, Certification Marks, GI A sign that distinguishes the goods and services of one enterprise from that of another Right to prevent others from using identical or similar marks with respect to goods or services that are identical or similar Rights obtained through registration (or use)

Relevance of IP for SMEs Industrial Designs: Ornamental or aesthetic aspects of a product. SHAPES : form of the article in three dimensions

Relevance of IP for SMEs Non Registrable rights: Copyright Grants authors, composers, and other creators legal protection for their literary and artistic creations (works) Gives bundle of exclusive rights, which allow owners to control the use of their original works in number of ways and to be remunerated Also provides moral rights which protect the authors reputation and integrity. LiteraryFilms Dramatic Music Photographic Fine art

Relevance of IP for SMEs Goods that have a certain quality or reputation due to the geographical region it comes from Generally pertaining to agricultural products Examples: Bordeaux wine, Ceylon tea, Gruyere cheese, Swiss chocolates, Champagne, Colombian coffee, Greek feta cheese Geographical Indications

Relevance of IP for SMEs Copyright law grants authors, composers, and other creators legal protection for their creations usually referred to as works. From a business point of view these will include computer programs or software, content on websites, catalogs, newsletters, manuals, artwork and text on product literature, labels or packaging, posters etc, It gives an author or creator economic rights to control the economic use of his work and moral rights to protect his reputation and integrity. No registration required to obtain rights Copyright

Relevance of IP for SMEs If reasonable steps have been taken to keep certain information secret and it has commercial value by virtue of being secret it may qualify for trade secret protection Use of confidentiality agreements, physical barriers to access to information and a HR policy that values and protects the confidential information of the business Trade Secret

Relevance of IP for SMEs Copyright – ring tones, games, software Trademark – Nokia connecting people, signature tune Patent – over 10,000 patented inventions, caller name display and caller specific ring tone two Nokia patents used by most phones, industry standard technologies. Nokia, Ericsson and Motorola account for more than 60% of the industry's R&D – significant entry barriers Design – shape, look, keypad etc. The mobile phone has become a status icon, making the product design critical in the purchase decision Trade secret – all of the know-how and confidential business practices that went into the manufacture of the device Several IPRs in one Product

Relevance of IP for SMEs Licensing IP assets : Technology licensing agreement : licensor authorizes licensee to use technology under certain agreed terms and conditions. May provide a constant revenue stream from royalties Ring-pull cans example The inventor licensed the system to Coca-Cola at 1/10 of a penny per can. During the period of validity of the patent the inventor obtained 148,000 UK pounds a day on royalties.

Relevance of IP for SMEs Legal protection of IP assets: -Turn intangible assets into exclusive property rights -Enable SME to claim ownership over its intangible assets - make intangible assets more tangible by turning them into « tangible » valuable business assets

Relevance of IP for SMEs Why is it so relevant? Strong market position and competitive advantage with exclusivity of rights Higher profit or returns on investment Additional income from licensing and selling IP Creating bargaining power in cross licensing agreements Increasing market value of the company Credibly threaten or taken action against imitators and free-riders Positive image for the enterprise

Relevance of IP for SMEs Importance of IP audit for identifying, monitoring, valuing existing or potential IP assets Support decisions for: -IP assets acquisition -Mergers and acquisitions -Licensing (maximum benefits from licensing agreements) -Enforcement -Cost reduction

Relevance of IP in Knowledge Economy IP adds value at every stage of the value chain from creative/innovative idea to putting a new, better, and cheaper, product/service on the market: Literary / artistic creation Invention FinancingProduct Design Commercialization Marketing Licensing Exporting Patents / Utility Models/Trade secrets Copyright/Related Rights Patents / Utility models Industrial Designs/ Trademarks/GIs Trademarks/ GIs Ind. Designs/Patents/Copyright All IP Rights

Conclusion Like owners of any Properties, IPRs owner can: Exploit the IPR himself License the IPR to another party (s) with mutually negotiated benefit sharing arrangements Cross License for mutually independent working and / or collaborative working Assign the IPR to another party (s) for an appropriate return Establish a franchise system involving other parties Take action against those who infringe IPR In a knowledge-based economy, creativity and innovation are key component of enterprise competitiveness

THANK YOU FOR YOUR ATTENTION Marina Sauzet