1. Technology development in the EU-27 In search of the contribution by SMEs

2. Small & medium sized enterprises SMEs are seen as an essential driver of economic growth 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 –SMEs are assumed to play a pivotal role in the innovation process (EC 2000) Ability to respond quickly to changing market needs Ideal setting to develop and roll out new technologies

3. The importance of IP strategy in R&D intensive SMEs Corporate IP strategy: how to protect market position and competitive advantage created through sustained R&D efforts? How to appropriate returns from extensive R&D and increase operating profit and added value? 2 IP strategy options: –Secrecy –Intellectual property rights Signaling function of patents (especially relevant for SMEs): –To customers: brand and marketing value –To investors and creditors: granted patents suggest novelty of technology and potential for future earnings attracting VC,… –To employees: attract promising personnel, enhance employee moral –…

4. Barriers for SMEs to apply for IPR Barriers for SMEs to engage in patent activity –Lack of understanding of IPRs and application procedures –Fear for disclosing innovation to industry majors –Cost of patent application: patent office administrative fees, patent attorney fees, industrial property consultancy –Cost of maintenance: (increasing) maintenance fees –Cost of legislation after grant : defence costs to enforce patent protection against infringers (even worse in complex industries, defending a patent can mean betting the company for an SME)

5. Policy awareness Policy awareness regarding the role of SMEs within national innovation 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 scale mapping and monitoring of SME contribution to patenting is currently absent! Due to considerable methodological challenges,

6. Patent data: opportunities and challenges Opportunities: systematic availability of patent data (e.g. PATSTAT) with detailed 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 how to identify SMEs among patent applicants?

7. European Commission 2003 SME definition: financials

8. Financial data: opportunities and challenges Opportunities: systematic availability of financial data with detailed info on turnover, staff, assets, shareholders, … Deficiencies in financial data (e.g. Amadeus) –Due to national legislation, among others in line with European Commission accounting directives, certain types of companies (among others companies not trespassing certain size criteria and having simple ownership structures are not obliged to comply with full disclosure and can publish simplified annual accounts or are exempted from disclosing financial information altogether. –In addition serious issue with information coverage in financial databases (absence of firms, as well as absence of specific information on firms that are covered) Relaxing the SME criteria

9. European Commission 2003 SME definition: ownership Company ownership information should be considered as well: SMEs partly or fully owned by larger companies can benefit from the financial strength and/or centralized R&D / IP department expertise of the business group assessment of shareholder structure per company to determine true size of a business and the resources to which it has access (at the business entity or business group level) Entities with mother company (+50%): dependent Entities without mother company (no +50% shares): independent

10. Feasibility study EUROSTAT (2012 – 2013): Feasibility study on large- scale identification of SME contribution in patenting ECOOM – INCENTIM (KU Leuven) Coverage: EU-27 Methodology: –Matching company names in patent database and financial database using name harmonization techniques –Disambiguation of multiple matches –Allocation of matched patenting companies with sufficient financial and ownership information to size-categories –Size verification of representative samples of unmatched corporate applicants and matched companies with insufficient 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 entities with unknown dependence status (sample checks for extrapolation) No financials available (sample checks for extrapolation)

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 Incorporating shareholder information Dataset and deducted indicators on SME contribution in technology development with this scope and coverage provides a number of applied research perspectives: –Technology management in SMEs –Investors in technology SMEs –…