Intellectual Property and Medium-sized Enterprises: Taking your ideas to the market
Intellectual Property and Medium-sized Enterprises: Taking your ideas to the market
Small and medium-sized businesses ("SMEs") are critical to any economy's survival. Small and medium-sized enterprises (SMEs) have made enormous contributions to developing and developing economies. According to a World Bank report, SMEs employ more than 50% of the global workforce and account for approximately 90% of businesses. In Cambodia and Kenya, SMEs account for approximately 50% and 80% of employment, respectively, implying that SMEs are critical to achieving a nation's Sustainable Development Goals.
According to the Small and Medium Enterprises Development Agency of Nigeria ("SMEDAN") and the National Bureau of Statistics ("NBS") Micro, Small and Medium Enterprises ("MSME") Survey conducted in 2018, SMEs contribute nearly 50% of Nigeria's GDP, employ over 80% of the workforce, and account for over 96% of all businesses in the country. The theme of the 2021 World Intellectual Property Day is "Intellectual Property and Small and Medium-Sized Enterprises" to recognise the importance of SMEs.
SMEs have demonstrated remarkable adaptability to various economic conditions, whether restrictive or liberal. They continue to play an active role in the digital transformation, which is critical for economic growth and globalization.
Despite the challenges posed by the Covid-19 pandemic, Nigerian SMEs have demonstrated remarkable resilience and an incredible capacity for adaptation and, arguably, growth.
Intellectual Property and SMEs
Intellectual Property ("IP") has become a well-known and accepted concept for businesses worldwide, defining the economic value associated with decisions such as the introduction of new products, the design and creation of a new brand, the introduction of innovative business processes, and the development of new product designs. Given the critical role of SMEs in national development and the fact that businesses now compete in the knowledge economy, intellectual property assets are critical for SMEs. Thus, SMEs should view intellectual property as a valuable business asset necessary for economic growth and future profit rather than an esoteric and obscure legal concept.
In a 2020 MSME Survey conducted by PriceWaterHouseCoopers, the consulting firm identified the legal regime as one of the challenges confronting SMEs; however, respondents identified issues relating to intellectual property registration and protection as critical considerations. It indicates that most SMEs do not view intellectual property rights as a valuable business asset and that awareness of their importance is relatively low within the SME community.
The majority of SMEs are vulnerable to multiple intellectual property thefts. Their inventions, innovations, and brands are most vulnerable to threats such as plagiarism, theft, cybersquatting, and trademark squatting during this stage of their development. Thus, SMEs are urged to take a number of protective and preventive measures, including trademark registration to protect brand identity, notifying relevant copyright authorities of the creation of copyrightable works, patent protection to protect innovation, and, most importantly, enhancing the value of SMEs through effective IP asset valuation and management. By registering brands, logos, inventions, or innovations, SMEs can increase their marketability, attracting potential investors who are reassured that their investments in the execution of business ideas and concepts are well protected.
It is critical to emphasize at this point that no brand, logo, invention, or innovation is too early to register. It is one of the myths impeding the growth of small and medium-sized enterprises in Nigeria. Identifying intellectual property assets early in the business's lifecycle will assist SMEs in determining which IPRs require protection.
Intellectual Property Challenges Faced by SMEs in Nigeria
Firstly, there is a lack of awareness among SMEs of the importance of IP protection and registration and a belief among SMEs that IP assets and their protection have little or no relevance to their businesses.
Secondly, the cost of registering an IP address. Due to the high cost of intellectual property registration in Nigeria, many SME operators struggle to register their intellectual property. Other SMEs essentially kick the can down the road by deferring registration of their intellectual property assets until later in their business's lifecycle, exposing their businesses to the risk of intellectual property infringements and an inability to realize returns on IP-related investments.
Thirdly, and in connection with the second challenge, there is the bottleneck registration process, which is also rigged with baksheesh. Numerous SMEs struggle to register their intellectual property on time due to the associated red tape and inconsistent timelines provided by regulatory agencies. As a result of this state of affairs, many SMEs have lost potential investors, stifling their growth.
Governmental Policies for Intellectual Property for SMEs
While entrepreneurs such as SMEs are responsible for enabling a competitive market to benefit consumers, it is the government's responsibility to foster an economic climate conducive to business operation and growth. In other words, the government is critical in fostering an environment conducive to SMEs' competitiveness. Through relevant government agencies such as the Trademark Registry, the Patent Registry, and the Nigerian Copyright Commission, the government plays a significant role in promoting the importance of IP rights recognition and utilization by SMEs.
One of the primary challenges identified previously is a lack of awareness among SMEs regarding the critical nature of intellectual property protection. Thus, the SMEDAN and relevant government agencies can conduct a comprehensive awareness campaign educating SMEs about the critical role of intellectual property protection in business success. Additionally, the government can bolster tax incentives for SMEs that produce creative and innovative products. For example, Section 22 of the Finance Act 2020 provides that capital expenditure incurred by businesses on software development or acquisition is capital allowance eligible.
Additionally, existing intellectual property laws must be updated to make them more favourable to SMEs.
The government's objective should be to enhance the competitiveness of new and existing SMEs through efficient use of the intellectual property legal system and sustained efforts to close the gap between SMEs' awareness of, access to, and use of the intellectual property system.
Conclusion
To summarize, it is critical to strengthen the relationship between regulatory agencies and SMEs. Stakeholders in the SMEs ecosystem, such as SMEDAN and the Bank of Industry, must work collaboratively with regulatory agencies to identify the IP requirements of SMEs, the barriers to effective IPR utilization by SMEs, and the formulation of policies that will enable SMEs to overcome these barriers to efficient IP system utilization.
The government's role in the interaction between SMEs and the intellectual property protection system cannot be overstated. It goes beyond raising awareness of the critical nature of intellectual property protection to the success of their business environment and includes establishing an enabling legal system that promotes reliance on and use of the IP protection system. It will facilitate an efficient and registration process (particularly through the use of technology) and cost savings associated with IP registration.
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