APR 26, 2021. While the challenges of the last year were unprecedented, the solution doesn’t have to be. 2020 has taught us the importance of resilience. A recovery that is both sustainable and resilient requires a Europe that believes in entrepreneurship and innovation as the basis of economic growth.
Entrepreneurship and inventiveness for an SME-based economy
Encouraging innovation will be important at all levels of the economy, but nowhere more so than for small and medium enterprises. Representing 99% of all businesses in the European Union, employing approximately 100 million people, and accounting for half of EU GDP, the role of SMEs in building new business opportunities, creating jobs, and ultimately boosting demand will determine Europe’s success in the years to come.
On the European Commission’s side, the importance of these companies for the EU’s economic recovery is clearly understood, with Commission President Ursula von der Leyen emphasizing that SMEs are “the motor of our economy and will be the engine of our recovery”. In addition, Internal Market Commissioner Thierry Breton has underlined EU efforts to bolster regulation to foster digital access for SMEs and the need to ensure that they can make the most of the opportunities presented by the Single Market.
A key component of recovery through the promotion of SMEs is fostering and safeguarding their capacity to innovate, invent and create. Companies like France’s Webdyn, whose patented IoT technology helps manage smart solar-energy systems, or Greek medical tech firm Micrel, whose smart infusion pumps for treating patients at home, compete with solutions from larger providers, show that SMEs’ innovative spirit helps drive the technological and economic development of tomorrow.
As seen in the EPO SME case studies, intellectual property rights play a huge role for companies like these.
Intellectual property rights as key assets for SMEs
If enterprising SMEs are unable to guarantee that their creativity will be rewarded, they are not incentivized to innovate, take risks, and ultimately generate technological developments to benefit broader society.
This is especially true in telecommunications, where constant innovation and investment in ground-breaking technologies have long been major growth drivers. A key tool in nurturing this process is the use of FRAND (Fair, Reasonable and Non-Discriminatory) terms for the licensing of patented standardized technologies like 5G. This model is fundamental in enabling entrepreneurship, as it allows companies to share their technology while still reaping the rewards of high-risk investments in R&D through licensing, which in turn enables them to reinvest in further R&D. This creates a virtuous cycle of investment and research which fosters technological progress and highly skilled jobs.
In turn, that same model also ensures that SMEs can access and innovate on top of existing technologies instead of having to develop them from zero, thereby leveling the playing-field and enabling competition with bigger players. This ability to access others’ cutting-edge technology empowers SMEs to innovate and find synergies to deliver on consumer demand and foster growth.
The European Commission’s Action Plan on Intellectual Property, published last year, expressly supports the role that intangible assets, such as intellectual property rights (IPR), play in developing next-generation technologies essential to the recovery process. Equally, the European Parliament’s report on the new industrial strategy for Europe encourages the European Commission to “continue supporting the ability of EU companies to innovate on the basis of a comprehensive IP regime and to continue developing open technology standards that support competition and choice”.
The concrete economic benefits of a strong IP framework in the EU are clear: IPR-intensive industries currently account for almost 45% of Europe's GDP and directly contribute to the creation of almost 30% of all jobs. In addition, Europe can count on 1.79 million researchers working in cutting-edge R&D alone – itself a key component of IP development and deployment.
In light of all this, in its forthcoming own-initiative report on the IP Action Plan, the European Parliament will have a concrete opportunity to reiterate the importance of strong IPR to ensure the global competitiveness of EU industry, as well as its leadership in the development of key technologies like 5G and 6G.
Intellectual property as a key lynchpin of economic recovery
To accelerate Europe’s recovery through entrepreneurship and innovation, it is vital to ensure the protection of Intellectual Property. Without this recognition and reward, pioneers will lack the incentives and the means needed to launch themselves into experimentation for new ground-breaking technologies like 5G or 6G.
If Europe wants to create a fertile ground for the economic recovery, entrepreneurs must have the necessary conditions to continue innovating.
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