Protecting Intellectual Property ‘Too Costly’ for Small Firms

Small firms are struggling to protect the ideas and inventions at the heart of their business, reports UK lobbying organisation
the Federation of Small Businesses

The FSB, which surveyed more than 1,000 of its 200,000 members to assess the problem, added that the time and money spent on protecting intellectual property (IP) is also damaging their ability to grow and innovate. One in three small firms claimed that 75% to 100% of revenue rested on the strength of their IP.

One in four of the business owners polled claimed to have suffered a violation of their IP over the past five years. Half of these said that a product had been copied by a rival, a third reported use of copyrighted work on a website, and a further third said they had experienced trademark infringements.

Nearly one in three UK small-to-medium-sized enterprises (SMEs) have spent money on securing IP rights in the past five years, and 22% have invested more than £5,000 (US$7,690), while 44% felt that the money spent on IP was not a worthwhile investment.

The FSB said that the onus was on the government to better promote its IP services and take a proactive stance on the issue.

The Hargreaves Review, published in 2011, had helped modernise the UK’s IP regime, according to the report, but “there are outstanding issues that need to be resolved”.

“The knowledge economy, which runs on innovative ideas and brands, is becoming ever more critical to our economic success,” said John Allan, FSB national chairman.

“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.”

A widespread lack of IP expertise across the SME community has affected companies’ ability to raise finance, the FSB warned. Just 5% of those with IP rights have used them to support an application for finance and only 25% have insured IP before encountering a problem.

Strong IP protections are particularly important to exporting companies. Just 13% of respondents said that they had secured overseas IP rights, although a further 21% said they intended to in future. Concerns were raised about how secure these rights would be in the Far East.


Related reading