Lately in our LinkedIn feeds, we notice more and more articles on the subject of Intellectual Property, Patents etc. These though, seem to target highly specialized tech companies, often single-product/tech ones and scientists who most likely, also, develop a specific technology.
We have worked for Research Centers and Technology Commercialization projects that had the funds (public or private), resources (clusters, networks) and focus (single “product”) to apply for Patents. But what’s the reality for SMEs (Small Medium Enterprises) operating away from the tech-world and that account for a significant percent of each country’s economy? We got a case (... actually, literally a case) to share from our own experience.
We have worked for Research Centers and Technology Commercialization projects that had the funds (public or private), resources (clusters, networks) and focus (single “product”) to apply for Patents. But what’s the reality for SMEs (Small Medium Enterprises) operating away from the tech-world and that account for a significant percent of each country’s economy? We got a case (... actually, literally a case) to share from our own experience.
Few years ago we were involved in the design of an iPhone 4 case for “urban prefer”, a progressive Taiwanese lifestyle company, the COIN 4 case. This seemingly simple product was one of the most difficult products we have ever been involved as:
a) The smartphone cases Market was/is supersaturated in all its segments.
b) The Brand had no brand-awareness effect outside Taiwan. It was just entering the specific market, so it did not have a set retail network, neither a distinctive USP to get a space in the (digital or analogue) retail shelves.
c) Due to limited resources, the production cost should be super low but the product should demonstrate a USP to achieve higher profit margins.
Fast forward, the design/development was completed and COIN4, a case that features grooves in its rear side where users could insert a coin to add a smartphone-stand function to the case, was released to the Market.
The product was instantly appreciated as it got into the Finalists in the IDEA Design Awards (USA) alongside high-tech products by Samsung, HP, HTC etc., was featured by leading design and gadget blogs, got space in actual retail stores in Taiwan, Japan, Korea, Europe, US and was extensively sold online by various online design and gadget stores (Amazon included).
However, less than a couple of months after its release, we noticed that cases that either copy exactly COIN4’s design or copy the insert-coin functionality, started to appear in online stores.
Having your design copied, is in a sense a “reward” from the Market and Competition. Nevertheless, we discussed with urban prefer’s management on what could be done to defend the design and it was during this talk that we first noted the challenges SMEs face with Patents.
WHY SMEs avoid Patents and Patent Disputes
Given that experience, our personal interest and involvement in a SME production facility in Taiwan, others we had later in various SME industries and discussions with IP Lawyers in Asia/Europe/US, we summarized our observations/reasons on why SMEs are reluctant to apply for Patents. These are:
a) The first time they will need to do so, they need to educate themselves, allocate time or/and employee(s), a process that for a company with limited personnel and daily long to-do lists, does not sound appealing.
b) The cost and effort to patent a product worldwide is considered high.
c) Not in all countries or towns/counties are available specialized lawyers to apply for Patents that can really protect a company’s IP.
d) Even if a SME is granted a Patent and the said Patent is infringed, then for these Companies it is whole new process and cost to locate the infringing Company, most likely located in a different country, hire lawyer go through legal processes. Too much effort, again, for a company with limited personnel and daily long to-do lists.
e) Quite some times, when the issue is about Design Patent, the outcome a legal dispute may be not favorable to the Patent-holding company as Design Patents can be pretty weak.
WHAT SMEs could do instead ?
Due to the fact that they are copied we assume that they do something right. They differentiate themselves from the competition and this differentiation is meaningful and therefore appealing to the Market, and to the Competition. They are passionate for their business, product and for this reason they can offer novel solutions. Making the above assumptions, instead of getting involved with the lawyers & regulations, they could strengthen their IP by focusing on what they know the best, innovation and product development. This could be done by :
a) Creating a strong Brand Identity and Strategy so that they will “own” their Market, at least in Customer’s mind and heart. This investment will benefit an innovative company in Internal and External Branding, Marketing and Sales.
b) Investing time and money to develop more and more novel Products and Sales strategies to keep ahead of any competition.
c) Investing in Design and Engineering even towards low-cost, incremental Innovation that may return great benefits for the Brand.
d) (if possible) Offering not a single-Hardware product solution, but a System that could be a combination such as Product and Service, Hardware and Software etc. In this way a SME Company sets entry barriers as the Competition will need more time, resources and capital to copy.
Definitely, the above proposals are not easy to develop and sustain. However, they add value in multidimensional and sustainable ways to the Products, the Brand and the Company.