The European Union Intellectual Property Office (EUIPO) and the Organization for Economic Co-operation and Development (OECD) have published a study on the impact of infringement of intellectual property rights in European SMEs.
The report “Risks of the illicit trade in counterfeits for small and medium-sized enterprises” highlights that SMEs whose intellectual property is infringed have less likely (34% less) to survive after five years. This problem especially affects independent SMEs that are not part of a larger business group and those that suffer from patent infringements.
Patents are intellectual property rights that protect innovations in the most direct way. Therefore, attacks on patents are especially dangerous for the economy in general and for SMEs in particular.
According to the latest SME Barometer, 15% of SMEs that are holders of a registered intellectual property right have suffered some infringement of intellectual property rights. This percentage is higher among SMEs that have presented innovations (19.4% in the case of SMEs that have presented innovations in the market). The infringement of intellectual property rights is, therefore, a special problem for small companies. that innovate and create jobs and growth.
The study also examines the countries of origin of counterfeit products that infringe the intellectual property of small businesses. It is confirmed that China it is by far the biggest source of counterfeits; it accounts for 85% of seizures related to online sales and 51% of global seizures of physical store sales.
The products of SMEs, in the spotlight
Counterfeiters target all types of products produced by SMEs. The most frequently affected products are electrical machinery and electronic items (30% of seizures), clothing (18%), perfumery and cosmetics (10%), and games and toys (also 10%). %). Furthermore, many of these counterfeit products they are of lower quality which often poses a threat to the health and safety of consumers.
In terms of the method used, around half of the counterfeit products infringing the intellectual property rights of SMEs seized at EU borders were purchased online.
According to the latest EUIPO SME Barometer published in September 2022, SMEs that have suffered infringements of intellectual property rights consider that this has negatively affected your activityand that has meant a reduction in its business volume, reputation, image and competitive advantage.
However, 40% of small and medium-sized companies admit that they do not monitor the markets to detect possible violations of their intellectual property rights, or they only rely on on random information about vulnerabilities, such as customer feedback or information provided by your business partners.
SMEs make up the majority of companies in the EU (99%) and account for around two thirds of jobs. In order to help them, EUIPO, together with the European Commission and EU national and regional IP offices, launched a number of initiatives in the field of intellectual property, including an SME Fund that provides financial support to small businesses to register their intellectual property rights. Over 32,000 EU SMEs have already benefited from the Fund.
According to the executive director of the EUIPO, Christian Archambeau: «This pioneering study confirms that innovative SMEs are more exposed to counterfeiting. These companies, which are likely to create the jobs and wealth of the future, are those whose chances of survival are diminished by unfair and illegal competition from counterfeiters and other intellectual property infringers. While it is necessary for companies to protect their intellectual property rights, it is also essential to ensure the correct application of the law and to help legitimate European operators in the fight against this scourge.”
