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When starting a small or medium enterprise (SME), intellectual property (IP) isn't always a top priority. However, in some cases, it can be the key factor in ensuring success and competitiveness in the market. With initial costs like infrastructure, hiring employees, and the tax burden that SMEs face in Portugal, it's understandable that investing in IP might not be immediate. Nevertheless, some fundamental steps must be considered to adequately protect the value of a business, its differentiating assets, and ensure the company's long-term success.
One of the first steps in creating an SME should be registering the brand. The brand is the identity of a company's products or services, distinguishing them from competitors and ensuring recognition among consumers. To protect this asset, it is essential to conduct a search to ensure that the desired name is not already registered by another entity. Additionally, it's important to verify the availability of the domain name to ensure the company’s online presence is consistent.
When registering a brand, you must decide whether the protection will be national or international. For companies looking to export, the European Union (EU) brand is an economical solution, providing protection in all member states. Outside the EU, the Madrid System allows registration in multiple countries with a single application. Without this protection, brand exclusivity can be compromised, allowing competitors to use or register similar brands, damaging reputation and hindering entry into new markets.
When an SME bases its business model on innovative products or processes, proper protection of its creations becomes essential. The main forms of protection include patents, industrial designs, and trade secrets.
Patents provide strong protection for new and inventive inventions. However, the invention must not have been publicly disclosed, either through publications or presentations, before the patent application is filed. Any public disclosure before securing protection could result in the irreversible loss of patent rights.
A patent grants the holder exclusive rights to exploit the invention for a period, typically 20 years.
Although the process of obtaining patents is considered expensive in the Portuguese context, it can be highly rewarding when innovation is at the core of the business model. A common strategy for SMEs is to initially apply for a national or European patent and later expand to other jurisdictions through the Patent Cooperation Treaty (PCT), which allows deferring high internationalization costs until the company is more consolidated and/or seeks third-party investment.
Recently, with the introduction of the unitary patent, companies can now validate a granted European patent in multiple countries at a reduced cost, eliminating the need for individual validation procedures in each member state. This cost reduction and process simplification make patent protection more accessible for SMEs, allowing broader protection with a lower initial investment, at least within the European market.
For companies whose innovations lie primarily in the design or aesthetic aspect of a product, industrial designs may be a more appropriate form of protection. Unlike patents, industrial designs can be obtained more quickly and at a lower cost, making them particularly useful for industries like furniture, electronics, and consumer goods, where visual design plays a critical role in commercial success.
Design protection can last up to 25 years with periodic renewals, and like patents, design rights can be licensed or assigned to third parties.
Patent registration can be an expensive process, especially for an SME. However, there are alternatives that may offer some level of protection depending on the nature of the innovation. One of the most common examples is protection through trade secrets. The famous Coca-Cola recipe, for example, was never patented but is said to be protected as a closely guarded trade secret.
To ensure the protection of trade secrets, it is important to implement several protective measures, such as confidentiality agreements (NDA - Non-Disclosure Agreement) with employees, suppliers, and any third parties who may have access to sensitive information. Establishing an effective confidentiality policy within the company can be crucial. Creating internal regulations that categorize different levels of confidentiality and define who within the organization can access each level of information is a good practice. The trade secret, for instance, should be reserved for a very restricted group of people within the company to minimize the risk of unauthorized disclosure.
While the initial investment in intellectual property may not seem like a priority, the truth is that protecting the intangible assets of an SME can make the difference between long-term success and failure. Investing in brand protection, securing patents when applicable, and implementing robust confidentiality policies are essential steps to ensure a company's sustainability and competitiveness in the market.
Legal Coordinator at Inventa, Official Industrial Property Agent and European Trademark and Design Attorney. In his current position, Diogo manages complex processes related to the protection of intellectual property (IP) assets and IP transactions, particularly in an international context. Additionally, he provides support in IP rights enforcement and litigation. Diogo holds a Law degree from the University of Lisbon School of Law and a Master’s degree in Intellectual Property Law, having defended the dissertation titled "Works and Inventions Generated by Artificial Intelligence."
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Source: Yunit Partner - Inventa | This content is the sole responsibility of the Brand
Last updated: 9th October 2024
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