ClearViewIP Collaborates with the European Investment Bank on IP Support Programme in Western Balkans

The European Investment Bank recently commissioned ClearViewIP to run an IP support and education programme for the Western Balkans Enterprise Development & Innovation Facility, which is funded by the European Commission DG NEAR. This is one of many such projects happening in less developed countries around the world. The overarching goal is to help develop IP competencies and culture which will, in turn, support economic development. Examples of similar programmes exist in, among others,  Thailand, Brazil and with the creation of the Visegrad Patent Institute (VPI) in Eastern Europe. These schemes seek to advance the economies of target countries an make them more attractive markets for foreign companies to operate or invest in, and to drive growth among local businesses, particularly SMEs.

Encouraging the uptake and exploitation of IP protection among SMEs not only enables them to protect their differentiation in the marketplace; but also to attract investment, and to pursue a global strategy without being at a disadvantage to more IP savvy SMEs from more developed economies. There are however numerous difficulties inhibiting SMEs’ adoption of Western-style IP strategies. ClearViewIP’s experience in the Western Balkans has given us an insight into those challenges, as well as a positive perspective of the exciting potential in the region.

Promoting IP-driven business transactions and partnerships

The aim of ClearViewIP’s work with the EIB was to promote IP-driven business transactions and partnerships and support innovators’ ability to raise finance, be it through IP transfer, IP-based business partnerships, or by demonstrating to potential investors the economic and financial value of their intangible assets.  The EIB specifically chose ClearViewIP based on the breadth of our global IP commercialization experience and track record of helping companies of all sizes reach the full monetization potential for their innovations.

In practice, this required ClearViewIP to spend some time developing an understanding of the current situation in the region. This was done by looking at IP filing statistics, assessing the current legislative environments and meeting key stakeholders including SMEs, universities, patent offices, governmental institutes, lawyers, investors and business advisors.

Providing tools to be successful

ClearViewIP then developed case studies relevant to SMEs in the region, providing examples of how SMEs ClearViewIP has worked with have successfully used IP to build company value and attract funding, generate alternative revenue streams, and even secure loans. From there, a toolkit was developed for use by local SMEs to help them understand the different types of IP protection available to them, and other key concepts such as confidentiality and IP ownership. The toolkit provides a checklist to help them start to plan and enact a pragmatic IP strategy. The case studies and toolkit were presented in six workshops, one in each of the target countries. The workshops were enthusiastically attended and interesting discussions were had at all six. ClearViewIP then went on to mentor one SME from each country: providing an IP audit, strategy advice, and analytical services over a six-week period. While a relatively small engagement, this had a considerable impact on the mentee companies as ClearViewIP was able to pinpoint key issues for some exciting early-stage companies.

From there, the case studies and toolkit were presented in six workshops, one in each of the target countries. The workshops were enthusiastically attended and interesting discussions were had at all six. ClearViewIP then went on to mentor one SME from each country: providing an IP audit, strategy advice, and analytical services over a six-week period. While a relatively small engagement, this had a considerable impact on the mentee companies as ClearViewIP was able to pinpoint key issues for some exciting early-stage companies.

Key issues for early stage companies

Naturally, there were variations in what we found among the six countries, with Serbia being somewhat more advanced than the others, but some generalizations can be made:

• The legislation is generally not the issue, having been brought in line with the EU acquis as the countries prepare for accession to the EU. There is, however, a lack of expertise and experience in the courts which means a timely, predictable resolution of IP disputes is unlikely
• Local SMEs file very few patents. Even fewer protect their innovation outside their home country. Reasons for this include a lack of awareness and understanding of international IP systems, an (almost complete) lack of technically trained patent attorneys, and most crucially, lack of funds. While SMEs in all countries struggle to set aside the budget for patent filing, it is even more difficult in countries where international filing costs are much greater in proportion to other costs such as wages and rent. While the original aim of our work with the EIB involved promoting IP transactions, and training brokers, it quickly became clear that there was simply not enough quality registered IP to support this and we needed to re-focus on supporting SMEs in order to develop some IP success stories from the region
• There is a lot of potential in the region. There is a lot of skill, particularly in software development, a lot of which is currently employed in outsourced development for Western companies. This coupled with a growing entrepreneurial spirit could lead to some very promising outcomes
• With the exception of Belgrade perhaps, the start-up ecosystem is incomplete. While there are a number of incubators and accelerators doing excellent work, funding is not available at all the necessary levels in most places, and there is not a critical mass of start-ups to enable community effects. Many promising start-ups choose to go to accelerators abroad, often in Poland or Bulgaria, and in some cases even Silicon Valley.
• The situation regarding IP transfer from universities is complex and sub-optimal. Ownership of IP is not clearly determined between the academic, faculties and the universities and none seem to be really incentivized to commercialize technology

Recommendations for promoting IP in the Western Balkans

Based on these findings, ClearViewIP recommended various options for how the EIB can help promote IP in the region including providing additional mentoring and education and, crucially, providing funding to enable SMEs to protect their IP globally. In this respect, there are many examples globally of schemes that have been employed to promote IP filing and liquidity. The Chinese government, for example, has fuelled huge growth in patent filing through tax breaks and subsidies. While this may have resulted in a quantity over quality approach to patent filing for some time, the quality is now improving and with the new IP courts, foreign companies are even using China as a patent litigation venue. The Singaporean government has provided a fund to support SMEs with the official and legal costs of patent filing, and a fund that provides loans, taking IP as collateral. Several countries have also started Sovereign Patent Funds, like France Brevets, which provides financial support for portfolio building and provides licensing support for no upfront cost.

Clearly, in the case of the West Balkans, the budget available is somewhat smaller than that of the Chinese government, so a funding scheme must make the best use of the funds available. To do so, it should not promote quantity over quality by having some level of assessment of the merits of an invention before providing funding, and should ensure that SMEs have some “skin in the game”; this can be done by providing the funding as matched grants, or providing funding only at the later stages of the patenting process. It is also possible to recoup some of the funding if the entity can benefit from any licensing income generated by the patent down the line, or for the recipient to pay back funding once their revenues reach a certain level.

Plenty of potential for innovation and growth in this region

It is clear from the reception ClearViewIP received, there is demand for this kind of assistance in the West Balkans and there is plenty of potential for innovation and growth. Institutions such as the EIB play an important role as they are able to take a longer-term view than local governments and make a considerable difference by providing funding. IP is just one of many issues facing SMEs in developing economies, but it is one which affects their ability to compete globally without moving operations outside of their home countries, taking their talent, jobs, and income with them. The EIB plans to follow up on the success of this programme by funding further IP mentoring, and ClearViewIP will certainly be looking to support them in this.