Europe’s R&D intensive SMEs call for support to drive digital economy

European Commission delivered SME Manifesto by a coalition of CEOs

[Brussels: Tuesday, 27 June] A group of CEOs representing Europe’s most innovation-intensive small and medium sized businesses (SMEs) delivered an SME Manifesto on ‘Driving growth for European Innovators’ to senior officials from the European Commission. The SME Manifesto includes measures to help Europe drive growth and create high-value jobs in 5G and the Internet of Things (IoT) revolution.

The IoT represents a massive opportunity for European businesses – with 75.4 billion connected devices expected to generate annual economic benefits of $11 trillion globally by 2025 – and Europe is uniquely placed with some of its most R&D intensive companies leading the development of the connectivity standards, such as NFC and 5G, that will underpin the deployment and success of the IoT.

European SMEs can lead the digital economy and drive the IoT revolution with the right support

Europe’s ambition to become the world’s leading digital economy is being held back by the absence of the incentives that small businesses need to compete – especially in terms of legal and financial support.

According to Mogens Peter Carl, Executive Chairman of IP Europe: We have excellent universities and research institutes, and a deep culture of innovation. Europe’s Achilles heel is its inability to commercialize its knowledge and expertise by creating the right service ecosystem for innovative SMEs to thrive. The Manifesto we are launching today sets out a positive agenda for change; one that will help Europe to realise its ambitions to become the world’s leading digital economy.”

Rubén Bonet, CEO of Fractus – a technology company that helped mobile phone manufacturers to place the antenna inside the handset – said: “When FRACTUS started, it was only two men in a garage, but we recognised the importance of patents. This allowed us to attract more than €20 million in venture capital funding, and more than $100m in licensing revenues. SMEs need to value and understand that the European patent system can be a strategic tool for its business success, and that is what the SME manifesto hopes to address.”

R&D tax credits and Better financing for Intellectual Property Rights intensive companies

The SME Manifesto calls for tax credits incentives for every euro invested in R&D by innovative SMEs. One example is France’s Crédit Impôt Recherche (CIR) which has been described as “the lifeline” for innovative SMEs.

Better financing and loan guarantees for Intellectual Property intensive companies can also boost R&D. Under the European Investment Fund and the SMEG Guarantee, local bank finances are guaranteed against a portion of their loans to SMEs. These guarantees should be increased from 50% to 80% of the loans for the most innovative companies, taking into account the quality of the patents and other Intellectual Property assets held by the SMEs.

Didier Patry, CEO of France Brevets, stated that: “France Brevets has years of experience helping highly innovative SMEs navigate across the innovation canyon and grow. SMEs are willing to take risks, but without better support and financial incentives their chances of success, and the likelihood they will turn into so-called “unicorns”, is very limited. The benefits to society and all citizens of Europe from successful innovative SMEs are so clear we must make it a priority to support them.”

Support for intellectual property rights and a system of open standards

The manifesto highlights two emerging threats to European R&D intensive companies: the growing number of patent free-riders – companies often based in Asia and the USA that use SME technologies at very low or no cost, and often unlawfully; and the systemic threat from a small group of Silicon Valley companies that want to replace the international system of open standards development, on which technology interoperability depends, with one based on proprietary technologies and platforms. These companies want to dominate the IoT at the expense of European innovators and global consumers.

Stefanie Mielert, Senior Counsel at the Fraunhofer Gesellschaft, Europe’s largest applications focused research organization – said: “Because of Fraunhofer’s unique position, supporting innovation across a wide range of sectors, we can clearly see the growing threats to European SMEs and the system of open standards. But we strongly believe that with the right support SMEs can play a very significant role in helping Europe to realise the massive potential of the Internet of Things.”

Fair access to justice to counter the assault on patents

An SME member of IP Europe which co-invented the Near Field Communication technology - used today in most smartphone handsets for secure payments – had to spend €24 million to defend its Standard Essential Patents (SEPS) in the courts. Three Asian companies were using them in their devices without paying license fees. The reality is that most European innovative SMEs do not have the financial resources or international reach to even consider taking non-European manufacturing giants to court for patent infringement in one, let alone multiple jurisdictions. If companies, small or large, cannot protect their R&D investments, get a fair, or any, return on their investment they will stop investing and the system of open standards will collapse.

Rubén Bonet, CEO of Fractus, and SMEs Chair of IP Europe said: If a company can't afford to enforce its patents, its intellectual property rights become meaningless. If we are serious about supporting European SMEs we have to ensure that they have real access to justice.”

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More detail on the SME Manifesto and signatories

The SME manifesto to ‘drive growth for European innovators’ was developed by IP Europe, France Brevets and the Fraunhofer Gesellschaft in collaboration with the CEOs of some of Europe’s most innovation intensive SMEs. More SMEs are now being invited to sign-up to goals set out in the manifesto, which can be viewed and digitally signed at: http://www.iptalks.eu/sme-manifesto

More information on the opportunities for SMEs in the growing digital economy

5G and the IoT present massive opportunities for innovators around the world. McKinsey & Company have predicted that the IoT could represent up to $11 trillion a year in economic impact by 2025, transforming the way we live and work through advances in fields as diverse as predictive maintenance in factories; traffic control and resource management in cities; managing wellness; self-driving vehicles; and smart homes. The growth in devices alone is equally staggering, with IHS estimating that the number of devices will increase from 15.4 billion in 2015, to 75.4 billion in 2025. Small and medium-sized enterprises (SMEs) should be at the heart of this revolution.

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About IP Europe

IP Europe is an alliance of innovation intensive companies, small and large, headquartered in the EU, committed to funding, contributing, protecting and promoting European innovation. The research and innovation of IP Europe’s members create the standards that underpin Europe’s digital economy. They are a European success story.

Contact:

Rory Douglas Home

rory@aspectconsulting.eu

+32 493 791 528

 

Evan O’Connell

evan@aspectconsulting.eu

+33 617 572 126

Topics: SMEs 5G IP Europe