The most valuable assets of a company are often intangible — a piece of computer software or a newly developed drug can be worth much more than any physical assets.
Businesses have increasingly sought to differentiate themselves from their competitors by innovation and rely on intellectual property rights to ensure that they are properly rewarded for their creativity.
But increasingly they are having to resort to the law to see off third parties that want to infringe their copyrights, trademarks or patents.
More than 31m items coming into the EU were suspected of violating intellectual property rights in 2017 and EU customs forces were involved in detaining almost 60,000 products infringing IP rights ranging from foodstuffs to mobile phones, according to figures from the European Commission published in September 2018.
Failure to enforce IP rights can lead to lost revenue opportunities. A 2016 report of the European Observatory on Infringement of Intellectual Property rights found that the negative impact of counterfeit drugs for the pharmaceutical industry for example is around €10bn or around 4.4 per cent of the sector’s sales.
Sometimes the potential impact of counterfeits can be even more serious — fake medicines or counterfeit aircraft parts for example can pose a threat to public safety.
“Areas of concern include pharmaceuticals, car parts, smartphones, toys and food products. There have even been cases of fake Ferraris,” says Frederick Mostert, an international legal IP scholar.
As technology becomes more important for businesses, patent applications have been increasing. The European Patent Office received nearly 166,000 European patent applications in 2017 — which it describes as an all-time high.
Thierry Debled, a European patent lawyer and director of the International section of the Center for International Intellectual Property Studies, says patent attorneys are vital to guide companies through the patent process where their technical knowhow is invaluable. “I’m a trained chemist and some of my work has been in areas like pharmaceuticals, glass manufacturing and metallurgy,” he says.
He says that the EPO has become much more efficient in approving patents. “It used to be a complex process and if someone had filed an opposition then it could take six to eight years for an appeal to be heard,” he explains. “There has been some rationalisation in the process and now they can deal with an opposition in six months.”
Businesses have a range of legal options open to them to defend their IP ranging from launching legal action in the courts to applying for a notice with the customs authorities to stop shipments of fake goods directly at the EU border.
Mr Mostert said that enforcing IP rights is becoming increasingly important because more and more businesses rely on cutting-edge technology, content, designs and brand identifiers for growth and innovation in an increasingly global market place.
“Many start-ups and small and medium enterprises have discovered the importance of IP, not just the big players,” he said. “A significant number of Internet and digital businesses are IP-driven and IP-focused which has propelled intellectual property to become an everyday term in business.”
Companies who invest in protecting their IP can expect to reap the benefits. IP intensive industries generated more than 42 per cent of total economic activity (GDP) in the EU worth €5.7tn from 2011 to 2013 with IP-intensive industries producing 28 per cent of all jobs in the EU during that period according to a study by the European Union Intellectual Property Office (EUIPO).
The worldwide reach of the internet and social media means that even small businesses need to protect their IP because a start up or a distinctive fashion design can go global from day one.
Part of the challenge in protecting IP is the difficulty in enforcing legal rights across geographic borders. Eleonora Rosati, associate professor in intellectual property law at Southampton University, points out that increasingly, technology and businesses are global but laws are national.
“My area of expertise is copyright and in different jurisdictions the problems are often very similar but the laws under which businesses are operating were drawn up in very different times,” she says. She adds that this remains largely the case even though over the past 30 years, various EU directives have helped harmonise some areas of IP law.
Many lawyers have welcomed plans for a new European Patent System. This will protect new inventions and automatically validate a single patent in all the countries which have signed up helping companies more easily enforce their rights across the EU and a European Unified Patent Court (UPC) is expected to deal with legal disputes.
The UK has signed up as a member of the court and is expected to participate despite the country’s planned departure from the EU next month. However the UPC is currently the subject of a legal challenge in the German courts.
This article was originally published online earlier this year, as part of the FT’s call for entries for inclusion in the listings of Europe’s Leading Patent Law Firms, researched by Statista.
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