European IP Helpdesk

Bulletin No. 3 Trademark

8

Do you have the feeling that SMEs and aspiring entrepreneurs consider IP as a business asset?

Especially in the early stages of business, SMEs and entrepreneurs are often not yet considering the important role of IP in their business plan, or the value and protection it can bring to the business and brand in the long term. This opinion is backed by the EUIPO SME Scoreboard, which highlights:

For those SMEs without registered IP rights, the main reason for not registering was a lack of knowledge about what IP is and its benefits. The percentage giving this reason has grown from 25 percent in 2016 to 38 percent in 2019.

Only 25 percent of medium-sized IPR owners have professionally valued their intangible assets, and this drops to 20 percent for both small and micro-sized IPR owners.

No doubt, trademarks and related IP rights are often among the most valuable assets of a business. Moreover, a distinctive trademark allows a business to build public goodwill and brand reputation in the goods or services it sells.

Are they aware of the benefits of a sound IP strategy?

Broadly speaking, SMEs are not thinking about IP as a business asset. This is especially true in the early stages of the enterprise and is likely not part of their initial strategy. With trademark rights, if you do not register and enforce your rights properly you are at risk of losing

them. Often it is when these rights are in jeopardy that the business owner discovers the value of a sound IP strategy and the importance of early registration.

What do you think are the greatest challenges SMEs face when it comes to IP management in general, and brand protection in particular?

Cost is the greatest challenges to SMEs. There is a cost to registering and protecting IP rights that are not budgeted in a new business. These unforeseen costs can be financially disastrous if not addressed at the beginning of a nascent company.

What are major hurdles and obstacles for start-ups and SMEs with regard to trademark protection?

Other than cost, lack of knowledge and foresight are the most common obstacles facing start-ups and SMEs when it comes to trademark protection.

Trademarks are the foundation upon which a business and brand’s reputation is built. They should be chosen carefully. A descriptive mark or a mark similar to an existing mark can be risky and costly for a business.

With globalisation and e-commerce, today SMEs can grow rapidly into new markets, and they can do so without registering or enforcing their IP rights in the new jurisdictions they’re operating in. This can be quite grave to the business. This can be avoided with an IP strategy in place from the start.

Business owners also do not realise how clever trademark squatters and counterfeiters are at following businesses or how quickly they will act. As soon as an SME gains a little bit of notoriety, bad actors unfortunately are waiting to steal these brands’ goodwill.

What are essential steps SMEs or start-ups should take if they want to ensure brand protection?

Brand protection begins with early IP registration in a company’s target markets. Registration of marks in any country which an SME intends to expand into is crucial. It is advisable to work with an IP attorney to get your IP registered and to develop a broader IP strategy for your organization.

The EUIPO SME Scoreboard boasts benefits to registering IP rights: 54 percent of owners claimed to have seen a positive impact, such as increase in reputation (52 percent), turnover (39 percent) and ability to access new markets (37 percent).

The International Trademark Association (INTA), a global not-for-profit association of brand owners and professionals, has long promoted proper brand protection through trademarking. INTA spans 185 countries as well as all industry lines and sectors. We spoke with Maysa Razavi, who leads INTA’s global anticounterfeiting efforts, about the major obstacles of brand protection, its advantages to SMEs and start-ups and the best strategies to combat counterfeiting.

“As soon as an SME gains a little bit of notoriety, bad actors are waiting to steal these brands’ goodwill.”

After registering a trademark, it must be enforced. This includes recording the mark with customs and acting quickly with the help of a brand protection professional when you discover any infringements or counterfeiting.

What impact does counterfeiting have on micro as well as small and medium-sized businesses?

It’s a misconception that counterfeiting is limited to major brands and large corporations. Given limited resources and experience, an SME often finds that its products and trademarks are being targeted by counterfeiters before the brand owner even begins the process of establishing its IP rights. This can ruin the SME’s entry into the global market before it has even begun. The EUIPO reports that 31 percent of SMEs with registered IP suffered from infringement, and that micro SMEs feel the negative impact of infringement more than larger SMEs.