IP & SME’S: Taking your ideas to Market.

INTRODUCTION

In the increasingly knowledge-driven economy, Intellectual Property (IP) is the oil that lubricates the economic engine of growth and development. Its impact on day-to-day business transactions can be felt in all ramifications, including small and media enterprises (SME’s). For many years before now, there is no denying in the fact that SME are the driving force behind human innovation and creativity. Entrepreneurs are responsible for a large number of products and innovative designs in the market today. Unfortunately, most SME’s often find it difficult to exploit fully from their creativity as a result of lack of awareness of IP protection. There are several occasions where a product that should ordinarily fetch the creator billions of naira will end up being exploited by other competitors as a result of lack of protection, leaving the original creator without any economic benefit or reward. A man who has spent money, time, and energy on creating a work or an invention from which society benefits should be rewarded by society by granting him a monopoly over his work for a limited time. This, in return, will encourage him to make more goods for the good of everyone. In an event where incentive over work is missing, there will be no progress. Hence, rather than being seen as an obscure legal term, IP should be seen as a powerful tool for economic growth by SME’s.

 WHAT IS INTELLECTUAL PROPERTY AND SME’s?

Broadly speaking, the term intellectual property refers to unique, value-adding creations of the human intellect that result from human ingenuity, creativity and inventiveness. IP serves as a shield to any innovation that emanates from individuals intellect by granting them a legal right. It is categorized into different areas of creativity such as Copyright, Industrial designs, Patent, Trademark, Trade Secrets, Geographical Indications, Appellation of origin, Related rights, Traditional Knowledge (TK), Traditional Cultural Expression (TCE), Genetic resources, New plant varieties Protection, and lot more. 

Small and Medium Enterprises, on the other hand, are seen as entrepreneurship businesses with 1 to 100 employees, and up to 500 or more for medium sized companies. SME’s contribute to the development of Nigeria in terms of employment, growth and development, and marketing of goods and services. According to the International Council for Small Business (ICSB), SME’s make up over 90 per cent of all firms, provide up-to 60% of employment, and account for 50 per cent of Gross Domestic Product (GDP) of any economy.

IMPORTANCE OF INTELLECTUAL PROPERTY FOR SME’s 

The importance of IP is often not adequately appreciated and its potential for providing opportunities for future profits is widely underestimated by most SME’s. In Nigeria, IP rights are deemed a distraction and not a thing of immediate concern. Most SME’s in Nigeria have a far lower level of interest in IP. In return, their growth and development are exploding out of control, with no solution in sight. IP protection is essential for SME’s in Nigeria, just as it is in other countries. It creates a safe legal environment for investment and commercialization of goods.

 In all, the following are some of the benefits of IP for SME’s:

1. Intellectual property makes it difficult, if not impossible, for competitors to take unfair advantage of a company’s goods that have been protected by IP. By this, SME’s, including innovative start-ups, will find it easy to navigate the perilous process of transforming an idea into a commercially viable product and to compete with success in the global marketplace, while safeguarding the public interest. 

2. IP protection aids in distinguishing a product from that of other competitors. For instance, trademark as a marketing tool enable customers to quickly identify a company’s goods. It is another way of creating brand for a company. In today’s world, it is important for SME’s to register their brands. A brand is something that is unique and capable of drawing the attention of people towards a certain product or service. It is an intangible asset that is more powerful than a real product or service. Today, consumers will tend to be influenced by brand instead of product or service. 

Regrettably, research has shown that despite the numerous benefits of trademarking and branding, over 80% of SME’s still fail to register their trademark. This is a bad idea. Failure to register a brand does not only damages the business reputation, it also puts the business at great risk. An erudite lawyer once said in ‘The Ultimate Insider’s Guide to Intellectual Property’:

“We hear this from business owners all the time: ‘Oh, we’re too small. It’s too early. We’re still thinking. We’ll think about trademarking once we grow bigger… ‘ Let me be blunt with you, this is utter nonsense on so many levels. You must not make trademarking decisions based on where your business is today. You must make these decisions based on where your business will be if it’s as successful as you hope it might become. “

A trademark is an important tool for SME’s in projecting a professional image. It is, in reality, one of the most reliable tools for bringing goods to market. Most of the leading companies in our contemporary world of today have a registered brand with a tremendous impact on their company growth and development. Similarly, SME’s can protect their work at the international level through IP protection. There are several treaties on international registration of IP rights. Among them are; The Madrid System for international registration of trademarks; The Hague Convention on international registration of industrial designs; The Lisbon Agreement on international registration and protection of appellation of origin; The patent corporation treaty on international registration of patent. These are aspects that will be beneficial to SME’s in Nigeria.

Aside from trademarks, there are a variety of IP rights that can help SME’s take their idea to market. IP rights, like Geographical Indication, is another area SME’s can explore. Entrepreneurs that work at a regional level will benefit immensely from this protection. The dairy industry is a good example. The dairy industry, like Shonga farm in Kwara State, can easily attract more customers and harness a large amount of revenue if they seek protection under geographical indication. 

3. Effective use of IP rights can enable SME’s to earn economically from their innovation. IP provides two types of rights to wit; economic rights and moral rights. The economic right allows SME’s who seek protection under IP to generate income through licensing or commercialization of the goods protected. The moral right, on the other hand, is the right that remains with the original owner of a product in an event where the economic right is assigned or licensed to another party. They are two in number to wit; moral right of integrity and moral right of paternity.

A proper perusal of some of the benefits of IP discussed above will undoubtedly pique one’s interest as to why some SME’s in Nigeria continue to struggle to recognize the potential of IP as one of the safest marketing tools available for bringing their ideas to market. There are, of course, some reasons behind this. Below is a brief overview of some of the problems SME’s face in using IP systems, along with potential solutions. 

CHALLENGES HINDERING THE EFFECTIVE USE OF IP SYSTEM BY SME’s IN NIGERIA AND THE WAY FORWARD

1. LACK OF AWERENESS AND KNOWLEDGE ON IP SYSTEM:  If you ask a year-old boy to choose between a box full of gold and a box of chocolate and biscuit, he will almost certainly choose the latter. Yes. That will be his choice because he doesn’t know the value of gold. This is the case with SME’s in Nigeria. They find it difficult to use the IP system in promoting their businesses as a result of lack of clarity about the relevance of IP to their business strategy and competitiveness. As a result, most SME find the system to be too complex and expensive to use. In return, it drastically reduces their chance of benefiting fully from the system.

2. HIGH COSTS REQUIRED FOR ACQUIRING AND MAINTENANCE OF IP RIGHTS: There is this general perception by most SME’s that the money spent on obtaining IP rights will ultimately outweigh the possible benefits to be obtained from the protected goods. This is not farther from the truth. The reason being that, before an entrepreneur can seek protection under IP, there are certain things that need to be taken into consideration. Relevant things like the costs required for the application process, legal advice, periodic payments required for renewal of protection (for some IP rights), and translation costs for international protection.

3. DURATION OF THE APPLICATION PROCESS: Another significant issue that SME’s face with IP systems is the length of the application process. It takes a lot of time, which is something that most entrepreneurs do want to deal with. For example, under section 3 of Patent and Designs Act CAP P2 LFN 2004, before a patent right can be obtained, the applicant must first file an application for a patent within the respective patent office. Section 3 (2) further provides that after filing the application, the applicant must provide an adequate written description to enable a person skilled in the art to practice the invention. In addition to this, the patent office has to examine whether the invention sought to be protected is sufficiently disclosed in the application. All these processes will take time, and for SME’s, delay in obtaining a patent can slow the process of taking their goods to the market. 

WAY FORWARD

You and I will certainly agree at this juncture, that most of the challenges discussed above can best be attributed to the system. This is a problem of the system, and it is only the system that can solve it. In order for SMEs in Nigeria to benefit from intellectual property rights, a drastic shift in policy is required, requiring the governments’ and the public undivided attention.

Governments are instrumental in facilitating access to the market. As a result, there is a need for the government to take an active role in raising awareness and educating entrepreneurs about the importance of the IP system. This can be achieved by establishing programs that will focus on educating the public as well as SMEs on various aspects of IP. This approach has been tried and found to be effective in many developed countries. For example, in 2003, the government of Singapore established education campaigns led by IOPS and the National Science & Technology Board aimed at creating public awareness of IP rights.

In some cases, the problem some entrepreneurs are facing has to do with access to information on IP system. If the government can facilitate easy access to information on IP, entrepreneurs will be well acquainted with the requisite steps to take in taking their goods to the market via IP protection. Not only that, it will assist SMEs in appreciating the wealth that surrounds IP rights. 

Further, the importance of IP due diligence, which includes an IP audit, can not be overstated. An IP audit involves undertaking a comprehensive review of a company’s IP assets, related agreements, relevant policies and compliance procedures. In all, an IP audit helps a business to analyze the following:

1. How the company’s intellectual property is used or unused.

2. Whether the IP assets are infringing on the rights of others or others are infringing on these rights.

3. Whether the IP assets used by the business are owned by the company or by others. 

The above information will assist a company to identify any threats to their business marketing strategies, and will also enable business managers to devise strong IP strategies capable of improving a company’s competitive position in the relevant market(s). Above all things, an IP audit will enable business owners to assess the risk and value of an IP assets in a proposed merger & acquisition agreement or sale of an IP asset.

CONCLUSION

Intellectual property protection is an effective tool that can be used by SMEs in taking their goods to the market. Any SME company that hopes to achieve its sustainable development goals, establishing a knowledge-based and innovation-driven economy with the use of IP rights is essential. Coupled with the IP policies and frameworks in place, SMEs can empower themselves to create wealth and take their goods to the world. Hence, IP rights should be seen as a thing of immediate concern.

References:

Francis Gurry: Intellectual property for an emerging Africa (https://www.WIPO.into/WIPO_magazine/end/2015/si/article_0001.HTML)

Law teacher: Patent and Intellectual Property Issues in Africa (https://www.law teacher.net/free-law-essats/international-law/patent hands intellectual property-issues-in-africa-international-law-essay(php)

Olisa Agbakoba Legal:  Role Of Intellectual Property For SMEs In The Nigeria Fashion Industry (https://www.mondaq.com/nigeria/trademark/757902/role-of-intellectual-property-for-smes-in-the-nigeria-fashion-industry)

Chioma Nwachukwu: Intellectual Property Protection-Small Media Enterprise In Nigeria ( https://lsetf.ng/content/intellectual-property-protection-msmes-nigeria )

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