This slide will briefly tell us how the IPRs can improve SMEs competitiveness, especially in the developing country.

1. Intellectual PropertyIntellectual Property
RightsRights
as a tool to enhanceas a tool to enhance
competitiveness of SMEscompetitiveness of SMEs
Mohammad Thoriq BahriMohammad Thoriq Bahri
Indonesian DelegationIndonesian Delegation
Turkey CSMEs Meeting 2014-2015Turkey CSMEs Meeting 2014-2015

2. Structure of the
Presentation
1. Intellectual Property in Today’s Economy
2. What are Intellectual Property Rights?
3. IP Rights and Competitiveness

3. Intellectual Property – A
Power Tool for Economic
Growth
• Intellectual property is a “power tool” for
economic development and wealth creation
that is not yet being used to optimal effect in
all countries, particularly in the developing
world.

5. Cont ribut ion of int angible
asset s t o f irm value –
Trends over t ime

6. Intellectual Property in
Today’s Economy
• Over 80% of the market value of Microsoft
derives from its intangible assets, especially
its intellectual property
• The value of the Coca-Cola trademark
exceeds US$ 50 billion.

7. Intellectual Property in
Today’s Economy
• IBM earns over US$ 1 billion a year from
patent licensing revenues
• US Patent License Royalties (in billions
US$:
$0
$20
$40
$60
$80
$100
$120
1980 2002

8. Dr. Horst Fischer, Corporate Vice
President, Siemens AG
“Any company wishing to prosper in the
next millennium will also have to
efficiently manage its IP portfolio”.
“For this reason it has become essential that
every manager in the enterprise - not just
those working in the corporate legal
department - appreciates and
understands not only what IP is, but how
it can be more effectively exploited."

9. Why have IP rights
become so important?
• Intangible assets as main source of competitive
advantage for firms
• Outsourcing of manufacturing by large enterprises
• Legislative changes (national, regional and
international)
• New types of patentable subject matter (e.g.
biotechnology, software, business methods)
• Universities and public research institutions also
beginning to focus on IP, especially patents

10. What are IP Rights?
• Industrial Property Rights
– Patents and Utility Models (or “short-term patents”)
– Trademarks
– Industrial Designs
– Geographical Indications
– Trade secrets
– Topographies of integrated circuits
• Copyright and Related Rights
• New Varieties of Plants

11. IP Rights: Patents
• Definition: A patent is an exclusive legal right granted
for an invention that is:
– New (Novelty)
– Involves an inventive step (Non obvious)
– Capable of industrial application
• Duration: 20 years from filing date
• Territorial right
• Requires disclosure of the invention
• Can be licensed to third parties
• Utility Models (or short-term patent): up to 10 years

12. Patents
• Why do SMEs apply for patent protection?
– Market exclusivity
– To recover R&D investments
– Facilitates licensing
– Advantageous negotiating tool
– Financing opportunities (venture capitalists, etc)
– Favorable image and credibility
– Freedom to operate
– Higher market value and publicity
– International expansion

13. Case study on
patent protection
• Case study on the commercialization of a patented
product
– Croatian pharmaceutical company (Pliva)discovers new
antibiotic (azythromicin)
– Pliva applies for patent protection in Croatia and in
various potential export markets
– Large pharmaceutical multinational Pfizer searches
patent databases and discovers the Pliva patent
– Pliva licenses Pfizer to produce the antibiotic in the US
as well as in some other countries in Western Europe
while Pliva maintains the exclusive right to
commercialize the antibiotic in Eastern Europe

14. IP Rights: Trademarks
• Trademarks:
– A sign capable of distinguishing the goods (or services) produced
(or provided) by one enterprise from those of others
– Crucial to differentiate products from those of competitors
– Basic pillar of any marketing strategy
– Important for enhancing recognition and reputation of the
product and for creating a loyal clientele
• Trademark registration:
– Provides exclusive right to prevent others from making identical
or similar products under the same or a confusingly similar mark
– Duration: 10 years. Can be renewed indefinitely.

15. Case study on trademark
protection
• An Italian businessman buys unmarked t-shirts from
manufacturers of generic clothing, attaches his trademark
and begins to sell them to retail stores
• Started in a garage in the periphery of Rome
• Today the Pickwick trademark is perceived by Italian
teenagers as a synonym of style and quality
• Pickwick has exports its products across Europe
• Its trademark is its most valuable asset.

16. IP Rights: Geographical
Indications
• Geographical indications:
– sign used on goods that have a specific
geographical origin and possess qualities or a
reputation that are due to that place of origin
– most commonly, a geographical indication consists
of the name of the place of origin of the goods.
– Examples: champagne, roquefort, tequila, chianti.

17. Case Study on geographical
indications
• Tequila
– In 1977 Tequila was registered as a
geographical indication in Mexico
– Tequila registered through Lisbon agreement
and mutual recognition agreements with the EU
– Only Mexican producers from 5 specified
regions of the country (where the raw material
“agave” grows) are entitled to produce Tequila
– Over 190 million liters of Tequila are produced
annually, giving direct employment to over
36,000 Mexicans

18. IP Rights: Industrial Designs
• Industrial Designs
– Aesthetic features of a product
– Must be new, original and have an individual character
– Adds value to the product by making it more appealing to
consumers.
– Enables customization of products to specific markets or target
groups (e.g. women, children, etc.)
• Design protection
– Provides exclusive rights to prevent others from making, offering,
importing or selling any product in which the design is incorporated
– Duration: in the European Union up to 25 years (unregistered
design: 3 years).

19. Case Study on industrial
design protection
• Trax® is a system of public seating
manufactured by OMK Design Ltd.
• Originally designed for British Rail. Had to be
visually appealing, comfortable and weather-
resistant.
• In 1990 it was installed in railway stations in
UK
• 14 years later it is installed in over 60 airports.
• Industrial design protection in UK, France,
Germany, Italy, Benelux, Australia and the US
has guaranteed a degree of exclusivity keeping

20. IP Rights: Copyright
• Rights given to creators for their literary
and artistic works
• Protected works: books; newspapers; computer
programs; databases; films, musical compositions;
choreography; paintings; drawings; photographs;
sculpture; architecture; advertisements; maps and
technical drawings.
• Generally protected for 70 years after te death of
the author
• Does not require registration (however…)

21. Case Study on Copyright
Protection
• Uruguayan software developer Memory®: accounting
programs for SMEs
• Copyright belongs to company
• Each copy of the Memory Software includes a license
for use
• Registered its software in the different countries in
which it operates
• Technological protection measures
• Permanent innovation
• Franchising of Memory business model

22. IP and Competitiveness
What are the factors that determine
the success of a new product in the
marketplace ?

23. Factors determining the
success of a new product
• The product provides functional
advantages
• Price
• Attractive design
• Reputation of brand
• Available in the main retail shops
• Consistent product quality
• After-sales services

24. How should SMEs Respond?
• If functional improvements, attractive
designs and a well-positioned brand are
some of the features that may determine the
success of a new product, what can an SME
do to protect these and maintain its
exclusivity over their use in the marketplace
and deal with free riders?

25. Legal protection of IP
grants exclusive rights
• Innovation - improvement
of functional aspects or
fabrication process of the
product
• Design - the product’s
appearance
• Brand - commercialization /
marketing of the product
Patents, Utility
Models
Industrial Designs
Trademarks

26. Intellectual Property Rights
• Innovative functional
features
• Design / aesthetic
aspects
• Brands
Patents or utility
models
Industrial designs
Trademarks

27. Example 1
• Patent for the fountain pen
that could store ink
• Utility Model for the grip and
pipette for injection of ink
• Industrial Design: smart
design with the grip in the
shape of an arrow
• Trademark: provided on the
product and the packaging to
distinguish it from other pens
Source: Japanese Patent Office

28. Example 2
• Invention of CD player
protected by patent
• Brand on CD player
protected by trademark
• Design of CD player
protected by industrial
design
• Music played on CD player
protected by copyright

29. SMEs and Global Economy
• In the new knowledge economy, intangible
assets, including innovative ideas, information
and know-how have become central business
assets.
• In the US, SMEs contribute 2.38 times more
innovations per employee than do larger firms
(Source: OECD)
• SMEs are proven innovators in the broad sense

30. SME Competitiveness
• In the new knowledge economy competitiveness is
increasingly based on firms ability to provide
high-value-added products and services at a
competitive price
• Globalization and trade liberalization has made it
crucial for SMEs to become internationally
competitive even when competing exclusively in
domestic markets

31. SME Competitiveness
• In order to be internationally competitive SMEs need
to constantly improve their efficiency, reduce
production costs and enhance the reputation of their
products by:
– Investing in research and development
– Acquiring new technology
– Improving management practices
– Developing creative and appealing designs
– Marketing their products and services

32. SME Competitiveness
• The above require SMEs to make significant
investments.
• Without intellectual property protection there is a
strong risk that investments in R&D, product
differentiation and marketing will be wasteful
• Intellectual property enables SMEs to have exclusivity
over the exploitation of their innovative products, their
creative designs and their brands, thus creating an
appropriate incentive for investing in improving their
international competitiveness

33. How can IP ‘add value’
to your business??
• Providing exclusivity over product or design: greater
market share
• Increasing revenue (through licensing)
• Enhancing market value of the firm
• Enhance image of the company
• Help in raising funds
• Access to new markets

34. Conclusion
By establishing a culture of identifying, cultivating
and strategically using its IP assets, an enterprise
can increase its revenue, have an edge over its
competitors and position itself well in the market.
Ignoring IP altogether is in itself an IP strategy that
may prove costly to the enterprise in the long-
term.

35. Thank You!