Managing intellectual property rights for digital innovation: meeting a key challenge for innovative SMEs

Ever since the late 19^th century, the world has recognised people’s right to earn recognition or financial benefit from what they invent or create, a principle so significant that intellectual property rights (IPR) are outlined as a fundamental right in Article 27 of the Universal Declaration of Human Rights. 

By striking the right balance between the interests of innovators and the wider public interest, the IPR system aims to foster an environment in which creativity and innovation can flourish. Not only does the legal protection of new creations encourage the commitment of additional resources for further innovation, but the promotion and protection of intellectual property spurs economic growth, creates new jobs and industries, and enhances the quality and enjoyment of life. 

Currently, all Eastern partner countries are members of the World Intellectual Property Organisation (WIPO). Thus, the legal framework for the procedures of obtaining patents and enforcement as well as the copyright and related rights are already harmonised between the EU and the Eastern Partnership.

However, in Armenia, a comprehensive study of the legal texts for intellectual property with recommendations on amendments to legal texts was carried out by an international team of lawyers in 2019. Discussions on the implementation of these recommendations have revealed a number of institutional and capacity challenges in Armenia, a situation that  increases the relevance of EU4Digital ICT Innovation activities in this particular policy area in Armenia.

The policy area ‘Intellectual property rights management for digital innovations’ was therefore selected by Armenia as the subject for EU4Digital national policy recommendations and implementation action plan, conducted as part of the EU4Digital Facility’s activity to promote a common legislative framework favouring ICT innovation among the Eastern partner countries.

In this framework, the EU4Digital ICT innovation team performed a gap analysis in the policy area of IPR management for digital innovations in Armenia, based on EU best practices, to be followed by tailored policy recommendations and an action plan for their implementation.

This article provides an overview of the EU best practices identified in Armenia’s chosen policy area – ‘Intellectual property rights management for digital innovations’.

INTELLECTUAL PROPERTY RIGHTS MANAGEMENT FOR DIGITAL INNOVATIONS

The advanced approach towards intellectual property (IP) in the EU member states is that IP is a business asset. Market success is created by delivering unique value propositions, in which the inventive step may be not even patentable under the existing law. 

Beyond the usual functions (granting exclusive power over the property and producing incentives for innovation), IP can be a source of many good opportunities for business development – by strengthening a company’s position among the competitors and also by making the basis for strategic partnerships across borders and industries.

Developing an efficient intellectual property rights (IPR) ecosystem suited to the challenges of the globalising digital economy requires both a better regulative environment and business competencies. The learning needs of the IPR ecosystem also increase and operational models need to be revised because economy and technologies change significantly. 

What follows is an overview of the main building blocks of EU policy supporting IPR management for digital innovation.

Exemption of R&D agreements and technology transfer agreements from antimonopolistic regulation

Commission Regulation (EU) No 1217/2010 of 14 December 2010 determines the principles of concluding R&D agreements. The Regulation stipulates that “all the parties of the R&D agreement have full access to the final results of the joint research and development or paid-for research and development, including any resulting intellectual property rights and know-how, for the purposes of further research and development and exploitation, as soon as they become available”. This Regulation intends to facilitate research and development while at the same time effectively protecting competition.

Commission Regulation (EU) No 316/2014 of 21 March 2014 determines the principles of concluding technology transfer agreements. This Regulation intends to ensure effective protection of competition and provide adequate legal security for undertakings. The Regulation applies to agreements where the licensor permits the licensee and/or one or more of its sub-contractors to exploit the licensed technology rights, possibly after further R&D by the licensee and/or its sub-contractors, for the purpose of producing goods or services.

IP rights distribution during research, development and innovation (R&D&I) under state aid 

The research, development and innovation (R&D&I) state aid rules, in force since 1 July 2014 (COM 2014/C 198/01), set out the conditions under which EU member states can grant state aid to companies to carry out R&D&I activities. The European Commission has procedures by which it monitors and approves state aid, while limiting distortions of competition arising from R&D&I aid, ensuring that state aid for research, development and innovation is fair.

The Guides to IPR rules have been elaborated for Horizon 2020 projects in order “to better protect and reap commercial and economic benefits from EU-funded research and innovation initiatives”. These IP rules are part of a single set of rules detailed in the official ‘Rules of Participation in Horizon 2020’, while specifications concerning the handling and management of IP may be outlined in the provisions of the Grant Agreement or in supporting documents as part of specific calls for proposal.

Management of intellectual property by universities and public research organisations

Recommendation 2008/416/EC on the management of intellectual property in knowledge transfer activities and Code of Practice for universities and other public research organisations aims to improve intellectual property management and knowledge transfer by universities and public research organisations (PROs) in the EU member states. It encourages EU member states to introduce policies or guidelines to ensure that publicly funded scientific research results are used commercially or for further research, to facilitate knowledge transfer by licensees and creation of spin-off companies and thus to encourage the uptake of innovations. 

The Code of Practice for universities and other PROs proposes operational principles for PROs and universities to use when defining or revising their institutional policies. Universities should encourage publicly funded research results to be used and disseminated, whilst allowing intellectual property to be protected.

EU level and national IPR support ecosystem 

At the EU level, the support on IPR mainly address SMEs that have limited resources, time for defending their IP assets and insufficient knowledge about building their business strategy around IP assets.

The European IP Helpdesk offers tailored advice to researchers and European SMEs participating in EU-funded research projects and SMEs involved in international technology transfer processes, including an active Helpline in case of suspected Infringement of intellectual property rights.

Evaluation of the existing policy on IP support and the effectiveness of support tools is performed by special expert groups. The reports (2007a, 2007b, 2013) point out the major principles of an efficient IPR support ecosystem: 

• provide intellectual asset management skills rather than increase IP rights registration; 
• ensure links between IP specialist support and general business support (e.g. National Intellectual Property Offices and more general innovation support); 
• ensure that support is coordinated at national and EU level; 
• take a client-service attitude towards SMEs. 

An important issue marked as a result of the assessment of EU practices on SME support in IPR was that “the best way to offer IPR support was to deliver it as part of general business support” [IPorta project report]. When reviewing the capacities of national IP offices to support SMEs, it was noted that “some national IP offices seemed to be comfortable remaining with their role as administrative bodies. Others faced legal restrictions in attempting to offer support to SMEs”. 

IPR support ecosystem of external consultants (beyond national IP office) 

The Report on “Benchmarking national and regional support services for SMEs in the field of intellectual and industrial property”, prepared by PRO INNO Europe, included a List of Support Services embracing 279 organisations from 33 countries.

The Enterprise Europe Network provides basic IP support for transnational projects of SMEs through: 

• Expertise, contacts and events to connect SMEs with the right international partners. 
• Expert advice for growth and expansion into international markets. 
• Solution-driven services to help SMEs turn innovative ideas into international commercial successes.

To support IPR issues emerging around publicly funded R&D, a special organisational unit exists in the EU – the Intellectual Property Booster (IP Booster).  This organisation is a new specialised “professional IP service for public research organisations looking to realise value from their research results”. The experts of IP Booster examine the case of any organisation that has benefited from EU funding and guide them towards the best intellectual property strategy, at no cost to this organisation and fully supported by the EC. The set of services proposed by IP Booster to SMEs and research beneficiaries includes initial IP audit; patent landscaping; IP evaluation or due diligence; patents, design and trademark applications; and negotiating technology transfer.

It is significant that the expert services are provided by companies with vast experience in venture capital investment and business strategies. 

Issues of IP emerging around digital technologies (Artificial Intelligence, blockchain, cloud technologies, Big Data, definition of patent scope, cybersquatting, etc.) are addressed

Because digital technologies are complex, developing and changing very fast, IP consulting organisations try to organise collaboration with specialised IT business associations, which even create special working groups involving experts from corporate business, to study the peculiarities of IPR around digital technologies and to elaborate guidelines that can be accepted by national IP offices, EPO and WIPO. DIGITALEUROPE hosts a working group including over 130 members and addressing the issues of trade secrets, unitary patent, and IPR enforcement in third countries.

Various online tools are available to SMEs and organisations

There are a number of tools available to SMEs and organisations guiding them in the challenges and the vast number of organisations for various IPR issues. For example, online training courses; regular webinars; IP for Business Series for SMEs; European IP Helpdesk’s Signposting Directory database; Instructions by EPO on IP protection; Your Europe EU Portal; the ip4inno (Intellectual Property for Innovation) project, etc.

Statistics or case studies are collected on the commercial importance of IPR management; empirical data is used by the policy-makers to better understand the problems and to improve the IPR ecosystem

The Intellectual Property SME Scoreboard 2019 has examined that “after registering their IP rights, 54% of owners claimed to have seen a positive impact. The main impacts identified were an increase in reputation (52 %), turnover (39 %) and ability to access new markets (37 %)”.

Next steps

The full report developed by the EU4Digital ICT Innovation team on EU best practices in the area of ‘Intellectual property rights management for digital innovations’ has been used to develop the gap analysis framework for Armenia; on the basis of the gap analysis, a set of policy recommendations has been drawn up  and aligned with national counterparts. 

These recommendations will form the basis for the elaboration of an individual national policy implementation action plan for Armenia, which is now in development. The action plan will identify concrete stakeholders in the partner country, EU tools, platforms, and practices that can be accessed and adopted, and possibly concrete counterparts in EU countries. Further activities by the Facility (training, study visits, networking events, promotion activities, etc.) will then support the interested stakeholders in their further activities on overcoming the gaps.

Adopting EU best practices in this way will help to boost the development of a mature ecosystem for the IPR management for digital innovation in the Eastern Partnership countries.

Ultimately, a common legislative framework will enable Armenia better to benefit from the EU Digital Single Market, and to exchange and develop new innovative ideas with counterparts from EU member states.

The policy recommendations and national policy implementation action plan for Armenia can be downloaded from the EU4Digital library here.