Patenting also effective for small- and medium-sized enterprises

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6 March 2014

Small and medium-sized enterprises (SMEs) prove to profit, just like big companies, from the protection of innovative products through patents. This is in contrast to what has been generally assumed to date.

On the other hand, small and medium-sized enterprises opt for patent protection less often than large companies do. This is a finding of a study among Flemish companies, the results of which were published last June in the scientific Journal of Product Innovation Management. The investigators of the Rijksuniversiteit Groningen (University of Groningen) and the KU Leuven (University of Leuven) call on SMEs to reconsider their patent strategy.

Utilization
The most important question was: do SMEs manage to utilize the exclusivity that patents provide to the same extent as large companies do? The investigators found this exclusivity to be reflected in the clear relation between patenting yes/no on the one hand and the share of turnover obtained from innovative products and a higher profitability on the other hand. Surprisingly, however, the relation was about equally strong for SMEs as for large companies.

Based on previous, especially American, research, the investigators would have expected SMEs to profit less from the exclusivity a patent affords, because enforcing patents against infringers is supposed to be too costly. They’d expected SMEs to use patents especially to receive license revenues. For the examined Flemish SMEs, however, this is precisely what proved not to be the case. With patents, they manage just as well as large companies to obtain a greater proportion of their turnover from innovative and more profitable products, but they grant licenses less often. Finally, the costs entailed in patenting were found not to have any visible effect on profitability.

In that light, it is striking that only 17% of the examined SMEs had filed patent applications, compared to 43% of the large companies. That's why the investigators conclude that SMEs, too, should regard patenting as a strategy to obtain a maximum yield from their innovation activities.