This special issue of les Nouvelles aims to pave the way within LESI (Licensing Executives Society International) to a broad and international reflection on the practice of small and medium-sized enterprises (SMEs), which represent an increasing share of innovation in all economies, as regards their relations with the systems of intellectual property.

Even though Small Medium Entities (SMEs) represent almost 95% of businesses and contributes significantly to global GDP1 not all type of SMEs own or manage Intellectual Property rights to support their business. It depends on their size, the type of activities that contribute to their competitiveness and also the sector in which they operate.2 Thus small businesses carrying out R&D activities in the life science sector or in other industries that are innovation intensive are more likely to be aware of the strategic role of Intellectual Property. By contrast, small retail companies usually own one or two trademarks and domain names protecting their business and main product or service identity at a national level, as their customer base is only domestic or local. They do not use Intellectual Property to i.e. access new markets or to collaborate with others to develop new products and services because of their lack of sophistication.3

The trick in using Open Innovation (OI) to augment any corporation’s (large and small) business development programs is typically not in the decision of whether or not to consider OI as an option, but rather the challenge of how to best use OI. This paper provides insights and tools specific to the latter challenge for Small and Medium Enterprises (SMEs).

Small and medium-sized enterprises (“SMEs”) are defined in the European Union (“EU”) Commission Recommendation of May 6, 2003 as “enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million.” Globally, according to a report from the World Intellectual Property Organisation, SMEs account for 95 percent of companies and 60 to 70 percent of employment in the OECD countries.

Standard Essential Patents (SEPs) can be hugely valuable. In particular, when the standard is used in mass-market consumer products, patents that are necessarily used create significant value for their owners. For companies large and small, the challenges are, first of all, to get their ideas used in the standards and then, if the standard is successful, to extract value (e.g. in the form of royalties) from their essential patents.

Modern knowledge-based economies increasingly rely on standards upon which innovative products are built. Standards allow businesses to benefit from economies of scale, to specialise on what they do best and invest in product differentiation. Standards reduce barriers to trade, create open markets and a level playing field, thus spurring competition and innovation. Consumers also reap substantial benefits from standardisation, in terms of lower prices, wider and interoperable product variety and more innovation. Standards can be arrived at either through unmediated market competition processes as de facto standards, or through industry coordination within standards-development organisations (SDOs.)

To encourage the protection of IP (industrial property) rights in small and medium enterprises (SMEs), an array of public policies has been implemented in France during the last few years. The French Patent and Trademark Office (INPI) has developed its role of supporting sustained growth among SMEs through IP. These public policies consist of subsidised coaching, support, financial aids and tax incentives.

In Germany, SMEs have an increasing patent awareness. This is due to the fact that Germany is the most important venue for patent litigation in the EU. Many landmark patent litigation cases attract the attention of the media so that the patent world is no longer a hidden world for most SMEs. The main driver for the increasing patent awareness is risk management, whereas securing exclusivity for generated innovation comes second.

The fourth Industrial Revolution, currently experienced by global economy, displays a melting-pot of a wide range of new technologies combined one another, impacting on every aspect of economy, industry and society by progressively blurring the borders of the physical, digital and biological spheres.

Although SMEs companies do not lack the will to innovate their products, they seem to have no awareness of the importance of exploiting their own innovations, first by setting up a patent portfolio and then by the implementation of in-licensing or out-licensing strategies.The result of this lack of protection is that some companies, without realizing it, give away their innovations to their competitors. This is particularly true in the design field. Italian design is appreciated all over the world, both in the East and West.

The UK Government recognises the importance of innovation and IP protection to the SME business community. Government has, for many years offered a variety of schemes that aim to support and enhance the spirit of invention and its protection. These support systems do fluctuate as Governments and their priorities and budgets change. Although we find ourselves in a positive climate today, there are many navigational challenges that must be faced by the average SME.

Within the U.S. economy, many small and medium-sized enterprises (SMEs) are intensely aware of the need to protect intellectual property (IP) and to incorporate IP strategy into their business growth and development plans. Due to the expense, complexities, and laborious process, unfortunately, many SMEs do not effectively build out a baseline IP strategy early enough. With the rise of global competition and a more interconnected economy, IP rights are critical assets for SMEs to compete effectively.

In China, when referred to SMEs, often micro-size enterprises are also taken into account. These businesses play an important role in China’s economic development. In 2015, the micro, small, and medium enterprises accounted for 99 percent of the total number of enterprises, and their contributions to national gross domestic product, industrial gross output value, total sales, taxes, and exports were 58 percent, 74 percent, 59 percent, 48 percent, and 68 percent, respectively.

Small medium sized enterprises or SMEs form the backbone of most economies but are particularly important in Asia where the majority of businesses still lack the scale and reach of their western counterparts in developed economies as multinationals. SMEs across Asia Pacific contribute 20-50 percent of their respective nation’s gross domestic product, account for 97 percent of all enterprises and employ half the workforce across Asia.It follows that the significance of Intellectual Property (IP) to business as a whole in Asia requires an assessment of how this community perceives the subject.

The Ministry of of Micro, Small and Medium Enterprises (M/o MSME) set up on May 9, 2007 by the merging of two ministries i.e. erstwhile Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries, has been on the fore-front to creaste awareness of IPR among the MSMEs in different parts of India. The MSMEs in manufacturing and service sectors have been defined on the basis of their investments as follows:

The participation of Micro and Small enterprises (SMEs) in the Brazilian economy is significant and growing: in 1985 SMEs represented 21% of Brazil’s GDP, having increased to 23.2 percent in the year of 2001 and to 27 percent in the year of 2011.1 In February 2017, SMEs were responsible for 54 thousand new hires, against approximately 26 thousand discharges by medium-sized and large companies.2

Many Chilean SMEs have good ideas that never see the market, either because they don’t know how to use the patent system in their favor or because they do not have access to good commercial partners. Sometimes, prospective partners simply copy the non-protected solutions and replicate them by their own. There is also a lack of local IPR management organizations that buy up idle patents and try to commercialize them among SMEs.

The “Promotion of technological development and innovation” is one of the policies set by the Colombian Government for the growth of the country’s economy with the objective of strengthening the national business sector through innovation.About 10 years ago, a comprehensive overview of the status of innovation in Colombia showed low investment in the activities of science, technology and innovation (hereinafter STI) in addition to the low participation of Colombian nationals in the Industrial Property System, namely the protection through patents of invention.1 It was found that the tax benefits introduced since the 90’s were not stimulating investment in STI, and the main cause was the lack of knowledge of nationals about how the Intellectual Property System operates in our country.

Small and Medium Enterprises (SMEs) have particular importance in the Mexican economy. This is not only because of their contribution to economic growth, but also their potential for jobs creation and innovation. SMEs generally represent a vehicle to boost regional and local economic development in Mexico.

The Patent Awareness of SMEs Aware in PeruIn general, Peruvian legal and individual persons are not aware of the importance of patents at the desired level. Furthermore, most of the Peruvian companies which seek protection of their patents before INDECOPI, the national authority competent for patent matters, are not SMEs.

South Africa does not invest in procuring accurate statistics on small businesses in South Africa, making it difficult to find the exact number of companies that operate in the country. SEDA issued a broad statistical overview of the SMEs of South Africa in January 2016 and presented the following indicators. According to the Banking Association of South Africa in South Africa, small and medium-sized enterprises make up 91 percent of formalised businesses, provide employment to about 60 percent of the labour force and total economic output accounts for roughly 34 percent of GDP.

All policies in favor of SMEs have actually limited effectiveness and have hardly produced any significant change in the behavior of this category of enterprises. So, while it may be necessary to strengthen and improve them, we may consider whether it is not necessary to transform the “patent economy” itself.

It has been quite some time that I have not updated the “Exhaustion Theory Is Not Yet Exhausted” series. In the latest edition stemming from March 2014, the focus was laid on several U.S. decisions where the IP right holder contested that he had consented to a “first sale” of the product as a result of which his IP rights were to be considered as exhausted, and where as a consequence of such deemed consent the purchaser considered itself free to use or resell that product without further restraint from patent law.

Steve Jobs and Apple introduced the iPhone, the first smartphone, in January 2007, and a waiting world was introduced to incredible volume both in standards and in patents. Global data usage now exceeds one billion gigabytes a month and half of all mobile devices are smartphones. The growth in mobile standards from the first generation in the 1980s to the development of the fifth generation today has witnessed an amazing array of technology, one release will capture the public interest only to be replaced within a short span of time by a new technology, more useful, more ubiquitous than the last one. The key question for discussion in today’s world of standards and patents is how to license the standards essential patents for the smartphone at a fair price.

Damages experts in patent litigation have been applying an economic model based on the work of Dr. Abhinay Muthoo to determine reasonable royalty rates through a profit sharing formula based on relative corporate discount rates. The work of Dr. Muthoo has been oversimplified and misapplied in this context. Attempts to use corporate discount rates as the sole determinative measure of bargaining power in a hypothetical negotiation for a reasonable royalty are fundamentally flawed. This use of the Muthoo Model is nothing more than another unsupported rule of thumb that is unreliable for determining reasonable royalties in patent infringement matters.

The artificial intelligence (AI) landscape is growing quickly. Artificial intelligence startups raised $5B in 2016, a 10-fold increase since 2012. Tech giants (Google, Microsoft, IBM) are contributing heavily to this acceleration, both in academic and practical pursuits. Google published 218 papers on machine learning in 2016, nearly double the number of publications in 2014. In December 2016, Microsoft launched a new venture fund specifically to evaluate and fund AI startups, kicking off the fund with an investment in Element AI, then acquiring Maluuba just one month later.iii, iv

The theme of the LES (Australia/New Zealand) Annual Conference in May 2016 was “Creation to Commercial—Disruption and Opportunities.” In keeping with that theme, a presentation was made “Disruption in the IP Services Industry?” The “?” in this title essentially asks the question “Is There Disruption in the IP Services Industry?” This paper, based around that presentation, looks at that question from the viewpoint of the players or stakeholders in the IP industry, the IP lifecycle or ecosystem, and the products and/or services being supplied in the IP sector.

The “Intangible Asset Market Value” (IAMV) study conducted by the authors examines the components of market value, and specifically the role intangible assets play in corporate market capitalizations across a range of indexes around the world. We believe IAMV is a strong reflection of innovation in the greater economy. This is consistent with a Reuters article on its list of Top 100 Global Innovators which shows organizations that invest in intangible assets such as patents and research & development (R&D) continually outperform the S&P 500. As seen in Figure 1, intangible asset value has continued to grow as the major component of the S&P 500’s market cap over the past decade.

The hyper-connected world we live in is fundamentally altering our lives. Digital technologies are challenging long-held norms. Inventions and their related intellectual property rights (IPR) are crucial for enterprises to differentiate themselves in a highly competitive global market. Software enterprises, in particular, are at risk of rapid obsolescence unless they capture, protect and leverage their innovation ecosystem and IPR portfolio.

1. Taxation of Patent Transfer Obtaining favorable capital gains taxation treatment on payments for transferring patent rights. 2. Reasonable Royalty Using patent litigation settlement agreements to support reasonable royalty damages in later litigation. 3. Infringement by Offers for Sale Avoiding liability for patent infringement when listing infringing products of third-party sellers on a website. 4. Litigation Bars by Collateral Estoppel Using a summary affirmance by the Federal Circuit to prevent infringement issues from being re-litigated. 5. Standing to Sue Challenging a litigation agent’s standing to sue for infringement and attempting to cure standing by joining the patent owner. 6. Patent Marking Attempting to avoid patent marking requirements by a retroactive disclaimer. 7. Willful Infringement Attempting to establish willful infringement based on activities by an infringer after it is sued for patent infringement. 8. Injunctions Losing the opportunity for injunctive relief by licensing patents to competitors. 9. Venue for Suit Dealing with new restrictions on where patent owners may sue for patent infringement.