April 30, 2020
According to a recent review by Statistics Finland, the number of companies engaged in innovation is growing. In increasing competition, protecting one’s own inventions is a considerable source of security, revenue and opportunity, say Kolster’s European Patent Attorney Kati Leinonen and CEO Timo Helosuo.
According to a recent survey by Statistics Finland, more and more European companies, whether small or large, are innovating. The share of companies involved in innovation activity increased to 62% in 2016–2018. As recently as 5–10 years ago, only about half of companies said they were innovating. Innovation activity has now increased especially among medium-sized enterprises, i.e. those employing between 50 and 249 people. The relative importance of medium-sized enterprises has grown rapidly not only in the creation of new jobs, but also in innovation. Companies are also spending more money on innovation than before. This is clear from the statistics on enterprises’ innovation activity published by Statistics Finland.
Innovations do not always end up being published or used: one in ten companies reported discontinued innovation projects. However, the lessons and benefits from the operation should be captured and protected for your own future use, says Kolster’s CEO Timo Helosuo.
“It is a mistake to think that a discontinued project or an unfinished product is not worth protecting. Protecting a discontinued project is also a worthwhile investment, as the result can be a valuable commodity that is of interest to other companies.”
An unfinished project may have generated, for example, technology that someone else might want.
“With a patent, you can prove that you are the original developer and owner of the technology, and sell or license it to those interested in developing it”, says Kolster’s European Patent Attorney Kati Leinonen.
Lack of skilled employees increases joint innovation between companies
Companies’ innovation is most commonly hindered by a lack of skilled personnel and external knowledge. According to Statistics Finland, a shortage of skilled workers is a major or moderate impediment for 43% of industrial enterprises and 39% of companies in the service sector.
“The lack of personnel and skilled employees means increasing cooperation between companies in innovation activity. The importance of handling contract matters then becomes emphasised. If it turns out afterwards that the innovation is really good, it can easily lead to a nasty dispute with your partner”, Leinonen says.
Practical matters must be clear to everyone and on paper.
“When a patentable invention is created in cooperation between several companies, will you also apply for the patent together and who will pay the protection costs? If an infringement is detected later, who will take legal action and who will pay the expenses? Who owns the rights to the invention and in what respect”, Leinonen lists things that need to be agreed on.
Even if the business goes bust, good IP protection can bring in money
Innovation is also slowed down and hindered by different priorities prevailing in the company, costs, an uncertain market situation and too much competition. For example, alternative technologies or several product lines cause trouble in targeting development work.
“Innovation activity and IPR are long-term investments in the future. A patent in a relevant area of technology is valid for 20 years, and can generate value in the IPR portfolio even if the company goes bust. Even if business fluctuates or your segment is no longer able to survive on the market, well-protected technology can create value even after circumstances have otherwise become unfavourable to the company. For example, Nokia continues to generate a significant revenue stream from the licensing of its patents years after the sale of its mobile phone business”, Helosuo points out.
Rise of the ICT sector increases competition
Enterprises’ innovation activity was most common in industry, such as in the pharmaceutical industry, the textile and clothing industry, and in the manufacture of computers, electronic and optical products. In the service sector, the most innovation took place in the software industry as well as in research and development.
“A significant rise in innovation activity in the ICT sector is evident from both the innovation activity survey and the European Patent Office’s statistics on the number of patent applications. If you operate in the ICT sector, you now have to decide whether you want to protect your assets in the face of increasing competition”, Helosuo says.
In an active area, what may happen is that a competitor beats you to it and patents a similar invention first. Even in that case, the hope of protection should not be thrown aside.
“Because of competition, it is important for both the inventor and the drafter of the patent application to think about the patentable invention from many different perspectives. For example, can your invention be modified to be different than the one patented by the competitor, and thus patentable? The applicant may also commission novelty searches and find out whether there are novelty obstacles to the competitor’s patent that could be used to overturn it during the opposition period”, Leinonen says.
A company risk analysis can be used to determine how actively competitors’ activities should be monitored and how they should be responded to.
“The same formula does not fit all companies. Some shape their own innovation activities based on the actions of competitors, while others focus on maintaining their own innovation and IPR activities.”