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02 Mar 2021
BY André J Maré

Intellectual property rights – a key for stimulating economic growth

According to a recent study published by the European Intellectual Property Office (“EUIPO”), companies that own and protect their intellectual property rights (“IP”) generate 20% higher revenue per employee when compared to non-IP owning companies. The report further found that these firms  (the ones with IP) pay on average 19% higher remuneration to their employees, and revenue per employee for IP owning companies average a staggering 55% higher.

The report was conducted as a joint project between the EUIPO and European Patent Office (“EPO”). In conducting its investigation, a total of 127 200 European companies were analysed across all the member states of the European Union and different economic sectors.

The report breaks down IP into patents, trade marks and registered designs and reveals that patent-based IP portfolios create the most value for companies. The numbers across the entire study (comparing IP-owning to non-IP owning companies) read as follows for the different IP elements:

  • Patents: 36% higher revenue per employee and 53% higher wages;
  • Registered Designs: 32% higher revenue and 30% higher wages; and
  • Trade marks: 21% higher revenue and 27% higher wages.

The information and communication sector was found to be the biggest IP owning sector, followed by manufacturing.

An interesting finding from the report relates specifically to the role of IP in small to medium enterprises (“SMEs”) where the report found that less than 9% of SMEs in Europe own any IP but that the SMEs who do own and leverage IP generally had an eye-watering 68% higher revenue per employee than those without.

On release of the report, Mr António Campinos, the president of the EPO had the following to say: “The stronger your IPR portfolio, the better your business performs. And IPR-owning businesses don’t just generate more revenue, their employees earn more, too. The study further demonstrates that there is significant untapped potential for SMEs in Europe, as it shows that they stand to benefit the most from owning IP.”

The study again underlines the intrinsic value of IP as an asset class for any organisation. What sets this study apart from others is the fact that it drills into the specific industries and relative size of the IP owners – all of which reached the same conclusion on the importance of intellectual property.

While the study makes for an interesting read and good benchmarking exercise, it would be good to have a similar analysis for the South African – or indeed, the African – market.

One cannot simply use the EUIPO study as a proxy for South Africa, or the greater African market, but what is clear is that owning and leveraging IP assets makes for more profitable companies and higher wages.

Based on the findings in respect of IP owning SMEs, it appears rather obvious that governments should see a clear strategy of how an economy can be stimulated:

  • Step 1 incentivise innovation/IP creation;
  • Step 2: provide a framework for the effective protection of IP assets (and effectively implement it); and
  • Step 3: create an environment fostering the effective exploitation of IP assets to the advantage of businesses, employees and the wider society.

If only the making and implementation of policy were as easy as 1 – 2 – 3.

André J Maré

IP | Executive

+27 82 440 1517