Five Reasons Why MSMEs Must Protect their IP Assets
August 24, 2020
If you’re a micro, small and medium-scale enterprise (MSMEs), it means you are a critical backbone to the Philippine economy, your sector making up 99% of Philippine businesses. However, with the varying degrees of community quarantine in place, your sustainability and resilience most likely have been put to a severe test, impelling the government to give significant attention to the survival of your operations.
One pivotal strategy to help you recover and stay on that road to recovery is to leverage your intellectual creations as an economically valuable asset through the intellectual property system.
Here are at least five compelling reasons why you must consider developing a strategy to protect your IP assets:
- IP for branding
Securing an IP helps the public distinguish you from your direct competitors as it represents the quality of your product, as well as your business’s consistency in delivering this quality.
While registering trademarks is usually the first step, other types of IP can also be leveraged as a marketing and branding tool that puts any business at an advantageous position to contend for market share.
For instance, through industrial design, protection can be obtained for a feature of a product that accords it a special, unique appearance. Industrial design articles range from fashion to industrial goods such as handicrafts, jewelry, vehicles, appliances, product packaging among others.
In cases where you have an innovative product, you may explore the potential of applying it for a patent or utility model.
- Helps you be a market leader
You can leverage your IP product as a competitive advantage as IP rights holders can prevent competitors from copying their products. Without IP protection, others can copy your innovative products and brand names and use them in any market, local or global, and without liability.
Simply said, without IP protection, your rivals can easily piggyback on your hard work. But with protection, you have one less problem to hurdle and have better ease when advancing in the market.
- More revenue streams
Apart from direct sales, you can secure an additional stream of income from the licensing, franchising or leasing of your IPs in exchange for fees or royalties. A license can be established long-term, in which case, you are not only gaining clients but rather forging business relationships, which is more impactful if you intend to cement your place in the industry.
In addition, more revenue streams would of course mean more income to recoup R&D cost, which is now becoming a common expense item in businesses, and pursue new R&D pursuits, ventures, and expansion plans.
- Gain bargaining power
Strong and attractive IP assets help give you bargaining power when negotiating deals. Such positioning will help you win favorable terms when forging mergers and acquisitions or cross-license deals.
If your IP product is much needed and much wanted, the parties you deal with will likely give in to your offers as long of course, they remain realistic. It is worthy to note that the best agreement is a win-win agreement, where both parties are satisfied from the benefits they reap from the partnership. Dissatisfied parties may only take their bitterness to courts, in which case the legal costs may exceed the benefits initially realized under the agreement.
- Access loans
Several countries have ruled that IP assets are acceptable collateral for loans. The Philippines has likewise recognized this through the passage of Republic Act No. 11057, also known as the Personal Property Security Act of (PPSA), which aims to lower MSMEs’ barriers to financing by broadening the scope of assets that can be pledged as collateral.
Signed by President Rodrigo R. Duterte, the PPSA extended the scope of collateral, which used to be only tangible properties, to include intangibles like IP. For this, accounting experts must also be tapped to determine the value of your IP.
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While hesitations on developing an IP strategy may arise due to the burdens of additional tasks and possibly, even costs, these end benefits must be realized to develop a strategy where growth is more sustainable.
To encourage MSMEs to use the IP system to their advantage, IPOPHL offers a slew of MSME-tailored programs such as the Juana Make a Mark Program, a trademark registration incentive program for women-led MSMEs, and the Inventor Assistance Program, a joint program with the World Intellectual Property Organization to bridge under-resourced inventors with expert IP counsels who can help them secure patents in various countries.
IPOPHL also provides free online IP learning workshops where MSMEs can gain more understanding on IP, depending on their level of appreciation of the subject.
IPOPHL customer representatives would also be glad to assist MSMEs in their online application, and help them best determine which type of IP is applicable for their work. MSMEs can email the office at ask@ipophil.gov.ph and reach out through its social media accounts on Facebook, Twitter, Instagram, and LinkedIn. ### (Janina Lim, Media Relations Officer)