IP/C/W/667  
 
9 September 2020  
(20-6117) Page: 1/4 
Council for Trade -Related Aspects of  
Intellectual Property Rights  Original: English  
 
INTELLECTUAL PROPERTY AND INNOVATION : 
 
MAKING MSMES COMPETITIVE - MAKING MSMES COMPETITIVE THROUGH INCLUSIVE 
PROTECTION OF VARIOUS IPS  
COMMUNICATION FROM AUSTRALIA, CANADA, CHILE, THE EUROPEAN UNION, JAPAN, 
SINGAPORE, SWITZERLAND, THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN 
AND MATSU, THE UNITED KINGDOM AND THE UNITED STATES OF AMERICA  
The following communication, dated 2 September  2020, is circulated at the request of Australia; 
Canada; Chile; the European  Union; Japan; Singapore; Switzerland; the Separate Customs Territory 
of Taiwan, Penghu, Kinmen And Matsu; the United Kingdom and the United  States  of America.  
 
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1  INTRODUCTION  
1.  Micro, small and medium -sized enterprises (MSMEs) play key roles in most economies and are 
important as major sources of innovation, industrial competitiveness and international trade. In 
emerging markets, small companies, such as start-ups, are able to create innovative products and 
services and to respond quickly to d rastic changes in technology and industrial structures. They also 
contribute to open innovation through collaboration with large and medium -sized companies. Open 
innovation could not only lead to new products, but indirectly could lead to new business 
opportunities, including through business expansion and thus contribute to sustainable growth 
through job creation.  
2.  As the intrinsic value of intangible assets has increased in importance for  industry and business 
in recent years, the ratio of intellectual pr operty in overall corporate value also has steadily risen. 
For example, the share of intangible assets in the S&P 500 's corporate value rose from 17% in 1975 
to 91% in 2019. Since MSMEs often face the challenge of obtaining financial support to develop the ir 
business, therefore by enhancing the generation and protection of intellectual property (hereinafter 
referred to as IPs) and developing valuable IP portfolios, MSMEs may enhance their corporate value 
and be better positioned to secure funding.  
3.  In this regard, the phrase "valuable IP portfolio " can be understood as an "IP portfolio that 
enhances a business 's competitive position ". The competitive features of products and services may 
be diversified in terms of not only technological aspects but also desi gns and trademarks. Such 
technological aspects can be protected by patents or trade secrets, and designs may be protected 
by industrial designs or copyright as well as against acts of unfair competition. In any case, business 
competitiveness is also acquir ed by branding strategies that rely on the use of trademarks. Thus, 
valuable IP portfolios may include various types of IP such as patents, designs, copyright, 
trademarks, trade secrets etc. However, most MSMEs lack IP awareness, and human and financial 
resources and experience in developing IP strategies, registering IP rights not comprehensively 
considering their IPs. They also lack resources and experience in enforcing against infringement acts 
based on their IPs.  
4.  In this context, the theme of this debate aims to facilitate the exchange of knowledge and 
experiences regarding the following points: 1) How MSMEs can develop their business through IP/C/W/667  
 
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  building and achieving an optimal exploitation of the highest possible qu ality IP portfolio, composed 
of various types of IP, and 2) How governments can support MSMEs ' initiatives to expand their 
businesses by encouraging such IP portfolios.  
2  COMPETITIVENESS THOUGH REGISTERED AND UNREGISTERED IPS  
5.  IPs can be categorized as regis tered or unregistered. The former requires the filing of an 
application with appropriate timing in order to be registered or granted by governments. The latter 
arise automatically without the need for registration or approval from users nor governments, wh ich 
may lower the cost involved in obtaining and maintaining IPs (e.g. copyright, trade secrets1 or 
unregistered designs). Each type of IP has distinct validity requirements and provides different forms 
of protection in terms of time span and scope of the  rights conferred. Accordingly, it is necessary to 
select and combine the appropriate measures to protect competitive technologies or other 
intellectual assets.  
6.  As a case in point where inventions can be protected by a patent or as a trade secret a busine ss 
must decide how to protect each invention based on its nature. It is generally thought that an 
invention should be protected by patent when the invention is substantially publicly available 
through, for example, reverse engineering of the final product.  On the other hand, certain inventions, 
such as manufacturing process, may be suitable for protection via trade secrets if there is little 
possibility that third parties can develop such an invention independently. Which strategy should be 
taken (e.g. fili ng patent applications or keeping it as a trade secret based) is determined with a view 
to maximizing the company 's competitive position and has a direct link to corporate business 
strategies?  In other words, if an appropriate strategy is taken, companies can ensure competitive 
advantages that will lead to further business development, including cooperating with other 
businesses. Otherwise, they might provide opportunities for their competitors to take advantage of 
their R&D results without any compensation . Since the disclosure of core technologies will have a 
significant impact on the competitiveness of MSMEs, it is essential that they carefully consider which 
strategic protections should be engaged to provide the best possible protection.  
7.  Unregistered IPs  are protected and enforced through legal theories and procedures that are 
different from those related to patents. Governments can support strategic IP portfolio 's protection 
and enforcement by ensuring strong legal structures for both patents and trade s ecrets. For trade 
secrets, this would include providing efficient legal relief measures, such as injunctions and 
compensation for damages against misappropriation of trade secrets and measures that enable the 
use of digital establishment of evidence suppor ting unregistered IPs.  
8.  Furthermore, for strategic IP portfolio 's protection and enforcement, companies, especially 
MSMEs, need to have the appropriate level of awareness or knowledge regarding distinct features 
of each IPs and various avenue for enforceme nt. In this regard, IP education as well as access to IP 
professionals are essential for MSMEs. Governments can play a key role in this area as well.  
3  INCLUSIVE PROTECTION OF IP RIGHTS  
9.  In general, a single product or service is usually comprised of a plural ity of technologies, and is 
characterized not only by technological aspects but also by designs, brands and copyrighted 
materials/contents. Under these circumstances, in recent years, it has become increasingly 
important for companies to rely on multiple I P rights to implement their business strategies for 
developing products and services. Furthermore, when companies conclude business partnerships or 
licensing agreements, or sell their businesses, their IP portfolios may be evaluated as an element 
necessary  for business cooperation, continuity and future business potential. Therefore, establishing 
high quality IP portfolios is essential for companies in terms of maximizing business value and 
opportunities. In this context, the EU and several of its Members p rovide support for SMEs in the 
form of simplified IP audits. It aims to recommend IP protection methods suitable to the business 
goals of the SMEs. They follow a service developed initially in 2004 by the French IP office under the 
name IP pre -diagnostic. The service has been further developed by the EPO and its Members. More 
recently, it has been updated and is implemented in an EU financed project in cooperation with 
11 EU Members. The UK also operates an IP audit programme for businesses.   
 
1 In addition, a company must make reasonable efforts to keep the information secret. This requires 
some procedure. The identification of the trade secrets and its protection will eventually be a bit cost intensive.  IP/C/W/667  
 
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  10.  With respect to patent portfolios, one product or process  consisting of multiple technologies 
could be protected by multiple patents. In this regard, it is essential to establish relevant patent 
portfolios that can cover key aspects of any product and its processes. Th is is also particularly crucial 
for companies from the perspective of managing infringement risks involved in conducting business 
activities, since third parties may claim injunctions and/or damages against infringement of patents 
if protection fails to co ver an element of the product or process.  
11.  In addition, due to the difference of the consumer preferences and needs, products and services 
increasingly need to present distinctive characteristics – not only in terms of unique technical 
features, but also i n terms of design and brand power if they are to be successful. By way of process, 
many companies start by establishing their initial concepts for the R&D strategies of new products, 
then plan and develop the products ' technical features, designs and brand s consistent with the 
agreed -upon concepts. Therefore, it is essential for companies to build the development and 
acquiring of IP rights into their business and growth strategies. This will ensure that companies 
determine the most appropriately beneficial timing in conjunction with product development and 
adaptation to the ongoing business environment, for the purpose of establishing intersectional 
IP portfolios.  
4  CONCLUSION  
12.  Proportionate IP portfolios consisting of a combination of various IP rights should be based on 
a strategic perspective. Protecting products and services based on different types of IP rights 
effectively protects both business operations and investments as well as support cooperation. 
Furthermore, governments can play an important role in  fostering environments that better allow 
companies, especially MSMEs, to create IP portfolios also may play key roles in terms of supporting 
companies, especially MSMEs, to develop IP portfolios. We would like to highlight the importance of 
multi-layer pr otection through IP portfolios, and discuss how governments can support strategic 
IP protection through sharing information under this proposed theme.  
13.  Member s could discuss the following issues:  
a. How to protect products and services based on developing IP p ortfolio s consisting of 
different IP rights ; 
b. How MSMEs can develop an effective IP strategy and relevant IP portfolio s; 
c. How governments can support MSMEs in developing IP management and the creation of 
relevant IP. (e.g. Sharing successful initiatives for ensuring inclusive IP protection) ; 
d. How to leverage the synergistic effects of registered and unregistered IPs, such as patents 
and trade secrets, for business success ; and  
e. How to develop IP strategies and IP portfolios that reduce the risk of IP litigation ?  
References:  
- THE WORLD BANK, SMALL AND MEDIUM ENTERPRISES (SMES) FINANCE Improving SMEs ' access 
to finance and finding innovative solutions to unlock sources of capital.  
https://www.worldbank.org/en/topic/smefinance  
 
- Robert Asselin, Sean Speer, A NEA NORTH STAR, 2019  
https://ppforum.ca/wp -content/uploads/2019/04/PPF -NewNorthStar -EN4.pdf  
 
- Stuart J.H. Graham, Ted Sichelman, Intellectual Property and Technology Startups: What 
Entreprene urs Tell Us  (Advances in the Study of Entrepreneurship, Innovation & Economic Growth, 
Vol. 26), 2016  
 
- Riitta Katila, Jeff D. Rosenberger, Kathleen M. Eisenhardt, Swimming with Sharks: Technology 
Ventures, Defense Mechanisms and Corporate Relationships , Johnson Graduate School, Cornell 
University, 2008  
 
- The Intellectual Property System for the Fourth Industrial Revolution, The Intellectual Property 
System Study Group for the Fourth Industrial Revolution, 2017  
 IP/C/W/667  
 
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  - OECD Science, Technology and Industry Scor eboard 2017 THE DIGITAL TRANSFORMATION, OECD, 
2017 
 
 
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