Intellectual Property Awareness & SMEs UK IP Awareness Survey 2006

1. Intellectual Property Awareness & SMEsUK IP Awareness Survey 2006 Dr. Robert Pitkethly robert.pitkethly@sbs.ox.ac.uk IP Awareness Survey report available at : http://www.ipo.gov.uk/ipsurvey.pdf Or http://www.ipo.gov.uk/press/press-release/press-release-2007/press-release-20070426.htm IP Awareness Intermediation Study reports available at : http: //www.accaglobal.com/general/activities/research/reports/smallbusiness_research/rr_107

2. IP Awareness One of IPRs roles is to act as an incentive to invest in innovation - but • Innovators must be aware that the IP system exists • Innovators must be sufficiently aware of the system to: • Use the system efficiently • Have a reasonable chance of obtaining the benefits offered IP Awareness & IPR Non-use by SMEs are a common concern - EPO/Roland Berger study (‘94) : 60% of non-patenting firms saw patents as little more than a name - IP awareness promotion for SMEs by Tokyo Metropolitan Government - UK IPO (Awareness Information and Media) & IPAN What is “Effective IP Awareness”?

3. Value Awareness of Benefits of IPRs Effective Awareness of How to use IPRs “Simple” knowledge & understanding of IPR use (for non-specialists) “Advanced” knowledge & understanding of IPR use (held by IP Professionals) Effective knowledge of IPRs Effective use of IPRs (IP Management) Components of IP Awareness Awareness of Users & Infringers Awareness of Owners & Creators Value Awareness of Benefits/Incentives of IPRs Effective Awareness of How to use IPRs “Simple” knowledge & understanding of IPR use (for non-specialists) “Advanced” knowledge & understanding of IPR use (held by IP Professionals) Effective Complete knowledge of IP Law Effective Basic knowledge of IP Law Effective Management of IPRs

4. UK IP Awareness Survey • Respondents • MDs / CEOs, Senior Managers responsible for IP • Vary with firm size - smaller firms predominantly MD • Survey Instrument • 37 Questions • Produced following 21 member IPAN input from industry, academia, professional & scientific associations, lawyers, patent attorneys & IPO

5. UK IP Awareness Survey • Sample Selection • Selected from UK IDBR maintained by UK ONS (includes Co. House & IR data) • Weighted sampling scheme inc: 1-9, 10-49, 50-250, 250+ emps • Aim: +/- 3% with 95% confidence for statements about whole population • Response Rates (No significant non-response bias detected in comparing early & late replies)

6. UK IP Awareness Survey • Administration • By Postal Questionnaire • 20,000 Questionnaires sent out • Mailing list produced by ONS directly from IDBR data • Data entry • Data entry from replies into spreadsheet for analysis (in this case by SPSS) carried out by UK IPO contractor

7. Measuring IP Awareness • Classical Measurement Theory • Creating scales by summing responses • Reliability measured using Cronbach’s Alpha (KR20 Score if Dichotomous) • Item Response Theory • Primarily used in Psychometric and Educational testing • Uses a logistic model to link the probability of a correct response to both respondent and question related parameters • Rasch Models • adaptable due to firm and question separability (which distinguishes them from IRT) • convert ordinal data to a metric scale • relatively robust in the face of missing data • adaptable to data varying with time and circumstances This research used both CMT and a basic Rasch Model with dichotomous data ICC Pr(Success) Ability

8. 1. IP Ownership & Innovation Data Collection • Firms were asked if they created or owned any IPRs (T.1): • Larger Firms also tend to innovate more than SMEs or Micro-Enterprises (T.2 but fewer)

9. 2. Perceptions of IPRs’ importance Data Collection Q. 11 Please indicate the importance to your business of each of the following methods to protect  innovations:(T.3) (1. Unimportant   2. Not very Important    3. Important    4. Very Important    5. Essential) : Non IPR based means of appropriation are also important (cf Levin & Klevorick, ‘87 & UK Innovation Survey ‘05)

10. 3. Knowledge & Understanding Data Collection • The percentage of firms who (correctly) know that publication before filing invalidates a UK patent application, increases with firm size (T.4a). This clearly shows the need for IP awareness promotion amongst SMEs and Micro-enterprises.

11. Measuring IP Awareness IP Awareness • Scale A included questions relating to IP Management • Scale B excluded questions relating to IP Management • KR20 (Cronbach’s Alpha) for Scale A = 0.83 Scale B = 0.77 • Firm Separation Reliability Score Scale A = 0.83 Scale B = 0.71 • Analysis carried out using SPSS (should have used Stata in retrospect to produce std errors for weighted data)

12. IP Awareness & Firm Size IP Awareness IP Awareness increases with firm size whether IP Management is included or not Firm Size (No.of Emps) IP Awareness (Fig.2) (Rasch Scale A inc IP Management)

13. 5. IP Policies Data Collection • Firms were asked if their company had an overall IP Policy (T.19) & if they distributed it to staff (T.20) :

14. 6. IP Training Data Collection • Firms were asked if their company provided any training in IP issues (T.21) • The proportion of firms with IP training increases with firm size but is still less than the incidence of company IP policies. • It is however about the level of the absolute proportion of firms with an IP policy which they distribute amongst their staff.

15. CONCLUSIONS - I

16. It is possible to derive and use a valid and reliable measures of IP awareness • The picture of IP awareness presented is consistent with what one might expect. • Larger companies tend to be more IP aware and have greater resources to both find out about and manage IP • SMEs and the mass of Micro-enterprises are effectively unaware of the IP system. • There is variation with Industry sectors but this is less than the variation with firm size. • IP awareness promotion is crucial to preserve IP created by SMEs & Micro-enterprises

17. Do Firms Seek IP Advice?

18. Where do Firms seek IP advice from?

19. Who were the “Other” sources of advice? • Company Secretary • Local Government • Friends • Insurer • Professional Bodies (RIBA) • Regional Technology Centre • US based sources • Web Forums • Auditors • Trade/industry Associations • Barristers, In-House Barristers • Books • Business Consultants • Business Link Organisations • Chambers of Commerce • Client In-House Patent Dept For Large Firms “Other” sources almost exclusively comprised Barristers or other legal cousel

20. Social Network Analysis • Burt (1982) argues that players with access to networks with “structural holes” or gaps enjoy high returns • Brokers in such networks can arbitrage information by bridging such holes • Communicating information and difficulties between groups • Transferring or translating best practice • Drawing analogies • Synthesis ‘Awareness Gaps’ lack the competitive / arbitrage aspects of Burt’s networks but do reflect the need for intermediaries to bridge information gaps.

21. Information Intermediaries and Brokers Social Network Literature: Burt (2007) found that “network data on direct contacts are sufficient to measure brokerage” & “measurement can stop with the network of direct contacts” Gould & Fernandez (1989) observed that the vast majority of brokerage involves a single intermediary Professional Marketing Literature: Strambach (1995) the most important information source on consulting firms was colleagues/business partners followed by references from other firms Enke, Geigenmuller (2001) client referrals were”the single most important way of establsihing contact between potential clients and consultants”

22. Who gives SMEs business advice?

23. Clients, Brokers and Experts

24. Interviewee Selection

25. Response Rates • Potential Respondents were identfied, emailed, telephoned • . • On average 25% of calls resulted in interviews. • Semi-structured interviews conducted by telephone.

26. Qualitative Interview Data • Interviews / “Expert” Opinion • Anecdotal • Unrepresentative? • Quantitative Surveys • Focussed “the paranoid or obsessed” reply? • Large Scale “the mostly uninterested or indifferent” don’t reply? Checking for Non-response bias and helping explain the problems of asking people to reply to questions about subjects they may not be interested in may be helped by Interviews - whether by Telephone or in person. All data is potentially helpful if one knows where it does (and doesn’t) come from and can interpret it correctly.

27. IP Experts - Patent & TM Attorneys 2. Venture Capitalists can be crucial in getting SMEs to contact IP experts • Other research (Pitkethly, 2006) shows that Venture Capitalists (VCs) value the possession of IPRs by firms they are considering investing in. “The start ups tend to be well catered for because venture capital now clearly looks for start ups to have some form of IP associated with it so some of the drive for it comes from the VCs themselves”. (PA11) “as soon as someone else’s money is involved then IP becomes something that’s there from day one.” (PA11)

28. IP Experts - Patent & TM Attorneys 3. There is very little incentive for patent attorneys to market themselves to SMEs “We’re in the fortunate position and indeed I suspect that most of the profession is that there’s far more work than there are people capable of doing it.” (PA5) “There’s masses of work around. You don’t have to go out and hunt it. Which is a remarkably fortunate situation,” (PA5) 4. Patent Attorneys’ marketing activity primarily relates to overseas firms. “To target SMEs for work is a very hard road … I’ve got to meet an awful lot of people before I find even one which has a bright idea. …if I go off to try and see half a dozen Japanese attorneys it’s a lot more productive.” (PA2) “The risk with SMEs is that you put a lot of time into them and they’re often not the best type of clients to have.” (PA10)

29. IP Experts - Patent & TM Attorneys 5. Some firms of patent attorneys do try to develop a reliable local SME practice “I think that SMEs are one of the most important targets we should have since I foresee major competition in the future for foreign deriving work and I feel that its important to have close links to the small companies because the small ones grow larger. Whereas the large ones have their own patent departments.” (PA4)

30. IP Experts - Patent & TM Attorneys 6. Referrals of work to Patent Attorneys generally come from a wide variety of sources- except Accountants “For whatever reason they don’t refer a lot of work our way. I think its perhaps that accountants don’t think in legal terms.” (PA9) “Well I don’t think I’ve ever had an accountant send me anything” (PA6) “Have we ever had a referral from an accountant? I can probably not think of any. .... And yet any business above the trivial there’ll be an accountant involved”. (PA2)

31. Intermediaries - Accountants • Costs are an issue facing accountants too • Accountants admit to referring little work to Patent Attorneys “incredibly rare.” (A3) “I don’t think I’ve ever spoken to a patent attorney” (A30) “From personal experience I wouldn’t know a patent attorney to whom I would refer anybody” (A11).

32. SME Clients 3. Recognising IP Costs but not IP Value is a critical hindrance to SME IP awareness “With SMEs there’s never enough time or resources so anything’s got to be low cost and low time. “(SME6) “I think that probably unless people think they are onto a winning ticket will ignore the problems “ (SME50) 4. Some SMEs simply ignore IP issues “We just try to be quick into the market Just keeping ahead by being faster. “ (SME6) “We’ve defended our name once or twice .. [but]It’s a rarity to be involved with this” (SME6) ”I’d give up straight away(if seeking IP advice).” (SME41)

33. SME Clients • Web based IP resources can prove a significant help to SMEs “The (IPO) website is a godsend because advice costs an arm and a leg to use a patent agent and you can learn a lot by looking at the website and what patents other people have got and I’m not sure people are aware of that and how easy it is to use. “ (SME13). “everything is done via the internet I would think everybody will do what I did just put patent attorney [and the place name] in and that’s it.” (SME16) 6. Industry Associations and Advice Centres also help raise IP awareness

34. Current Research • Survey and Interview based study of IP Enforcement costs for SMEs • Methodological Issues : • Access to SMEs (OFLIP Database) • Rarity of Litigation and the large number of SMEs(two pronged approach through interviews & networks AND surveys • The Logistics of large scale Surveys (web based surveys)

35. Surveys Web Surveys • Only require email • Data entry by respondents • Complex conditional question sequences • Require email addresses which are hard to find • Reminders almost cost free • Off the self systems now cheap and sophisticated Postal Surveys • Require postal costs • Need Data Entry • Simple paper questionnaires • Only require postal addresses from databases • Reminders double/treble postal costs The costs of finding individual email addresses from Databases and web searches (c7-14 per hour per searcher) MAY exceed the savings from no Postal, Reminder or Data entry costs. Very large surveys may be easier using by post unless good email addresses are available.

36. END IP Awareness Survey report available at : http://www.ipo.gov.uk/ipsurvey.pdf Or http://www.ipo.gov.uk/press/press-release/press-release-2007/press-release-20070426.htm IP Awareness Intermediation Study reports available at : http: //www.accaglobal.com/general/activities/research/reports/smallbusiness_research/rr_107 Or robert.pitkethly@spc.ox.ac.uk