Technology development in the EU-27

1. Technology development in the EU-27 In search of the contributionbySMEs

2. Small & medium sizedenterprises • SMEsare seen as anessential driver of economicgrowth in Europe (Eurostat 2009) • 99,8% of non-financial companies in Europe classify as SMEs • Within the non-financial business economy SMEs represent • 57,4% of turnover • 58,7% of value added • 66,7% of employment • SMEsare assumedtoplaya pivotalrole in the innovationprocess (EC 2000) • Abilitytorespondquicklytochanging market needs • Ideal setting todevelopandroll out new technologies

3. The importance of IP strategy in R&D intensive SMEs • Corporate IP strategy: howtoprotect market positionandcompetitive advantage createdthroughsustained R&D efforts? How toappropriate returns fromextensive R&D andincrease operating profitandaddedvalue?  2 IP strategy options: • Secrecy • Intellectual property rights • Signalingfunction of patents (especially relevant forSMEs): • Tocustomers: brand and marketing value • Toinvestorsandcreditors: granted patents suggest novelty of technologyandpotentialforfutureearningsattracting VC,… • To employees: attractpromisingpersonnel, enhance employee moral • …

4. BarriersforSMEstoapplyfor IPR • Barriers for SMEs to engage in patent activity • Lack of understanding of IPRsandapplication procedures • Fearfordisclosinginnovationtoindustry majors • Cost of patent application: patent office administrativefees, patent attorneyfees, industrial property consultancy • Cost of maintenance: (increasing) maintenance fees • Cost of legislationaftergrant: defencecoststoenforce patent protectionagainstinfringers(even worse in complex industries, defending a patent canmeanbetting the company foran SME)

5. Policy awareness • Policy awareness regardingthe role of SMEswithinnationalinnovation systems • Europe: • European Commission hosts an IPR-helpdesk for SMEs • Unitary EPO patent (25 of 27 member states), reducing administrative costs, translation costs and litigation costs • Japan: • SME IP support at prefectural SME support centers • Database of senior personnel in large companies with experience in IP • Prior-art patent searching free of charge for a.o.SMEs • Reduction and exemption of patent annuities for a.o. SMEs • Accelerated examination system • JPO assistance for strategic foreign applications by regional SMEs • Large scalemappingand monitoring of SME contributiontopatentingis currently absent! Duetoconsiderablemethodologicalchallenges,

6. Patent data: opportunitiesandchallenges • Opportunities: systematicavailability of patent data (e.g. PATSTAT) withdetailed information on: • Applicants, inventors • Address information • Technology domain • Claims of the patent • Cited prior art • … • But: patent databases contain no business information on applicants, not even VAT number howtoidentifySME’samong patent applicants?

7. European Commission 2003 SME definition: financials

8. Financial data: opportunitiesandchallenges • Opportunities: systematic availability of financial data withdetailed info on turnover, staff, assets, shareholders, … • Deficienciesin financial data (e.g. Amadeus) • Duetonationallegislation, amongothers in line with European Commission accounting directives, certain types of companies (amongothers companies not trespassing certainsize criteria andhavingsimpleownershipstructures are notobligedtocomplywith full disclosureandcanpublishsimplifiedannual accounts or are exemptedfromdisclosing financial information altogether. • In additionserious issue with information coverage in financial databases (absence of firms, as well as absence of specific information on firmsthat are covered)  Relaxing the SME criteria

9. European Commission 2003 SME definition: ownership • Company ownership information shouldbeconsidered as well: ‘SMEs’ partly or fullyownedbylarger companies can benefit from the financial strengthand/or centralized R&D / IP department expertise of the business group • assessment of shareholderstructure per company todeterminetruesize of a business and the resources towhichit has access (at the business entity or business group level) • Entitieswithmother company (+50%): dependent • Entities without mother company (no +50% shares): independent

10. Feasibilitystudy • EUROSTAT (2012 – 2013): Feasibilitystudy on large-scaleidentification of SME contribution in patenting • ECOOM – INCENTIM (KU Leuven) • Coverage: EU-27 • Methodology: • Matching company names in patent database and financial database using name harmonizationtechniques • Disambiguation of multiple matches • Allocation of matchedpatenting companies withsufficient financial andownership information tosize-categories • Sizeverificationof representativesamples of unmatched corporate applicantsandmatched companies withinsufficient financial/ownership information (ongoing)

11. Matching PATSTAT – AMADEUS

12. SME vs.large company applicants

13. SME vs large company applicants • Large entities • Independent small entities • Dependent small entities • Small at group level (consolidated financials available) • Large at group level (consolidated financials available) • At least large at group level (sum of mother & daughter financials) • Small entitieswithunknowndependence status (sample checks forextrapolation) • No financials available (sample checks forextrapolation)

14. SME vs large company applications

15. Overall corporate applicants matching/size-class status

16. Contribution of this research • Scope of exercise: full EU-27 • Use of comprehensive SME definition • Incorporatingshareholder information • Dataset anddeducted indicators on SME contribution in technologydevelopmentwiththis scope andcoverageprovides a number of applied research perspectives: • Technology management in SMEs • Investors in technologySMEs • …