IP/C/W/635  
 
9 October 2017  
(17-5409) Page: 1/3 
Council for Trade -Related Aspects of Intellectual 
Property Rights  Original: English  
 
 
INTELLECTUAL PROPERT Y & INNOVATION: INCL USIVE INNOVATION AND  MSME TRADE  
COMMUNICATION FROM A USTRALIA, EUROPEAN U NION, JAPAN, SWITZER LAND,  
CHINESE  TAIPEI AND UNITED STATES OF AME RICA 
The f ollowing communication, dated 4 October 2017, is circulated at the request of  Australia, 
the European Union, Japan, Switzerland, Chinese Taipei and the United States of America.  
 
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In many countries around the world,  whether developing or developed, MSMEs are the backbone 
of the national econom y. Globally,  they account for more than 90% of business , whereby in most 
countries, in particular in low - and middle -income countries, they account for approximately 
99% of business .1 They can be found in most economic sectors, from agriculture and textile 
manufacturi ng to development of high technology goods and services. Regional and global supply 
chains generate many opportunities for MSMEs, as innovators, producers, dev elopers,  suppliers or 
as service providers. P rogress in information and communication technologie s contributes to 
facilitate the activities and provide for new opportunities for MSMEs  at the national and 
international level . 
However, MSM Es often focus on local markets  and face numerous challenges in integrating into 
global markets . According to WTO calculations based on the World B ank Enterprise Surveys, 
includ ing over 25,000 MSMEs in low-and middle income  countries, direct exports only account for 
7.6% of sales in the manufactur ing sector, in c omparison with large manufacturing businesses 
where expo rts account for 14.4%.2 The share of Low - and middle -income countr y MSMEs in 
service s export s is even smaller, accounting for less than 4% of total services sales. The figures 
for high income countries are different. Direct export shares of MSMEs in high i ncome countries 
add up to half of the value of total exports.3 It is thus important to look at policy measures that 
are successful and consider how local business environments can be improved conducive to MSMEs 
and which allow them to increase their partic ipation in an open international trade framework, 
including through exports. An important element in this context are intellectual property rights 
(IPRs).  
The following subsections briefly highlight how IPRs can increase and enhance international trade 
opportunities of MSMEs.  
1. IPRs can help ensure that creators benefit from the fruits of their labours, recoup 
investments, and reward risks to bring to market new technology and ideas in innovative 
products and services. They create a tradeable right and asset . Hence, this right confers 
ownership advantages to firms serving foreign markets, which can thus expand their 
                                                
1 WTO, 'World Trade Report 2016: Levelling the trading field for SMEs ', p.3: 
https://www.wto.org/english/res_e/publications_e/wtr16_e.htm  
2 ibid., p.21  
3 ibid., p.21  IP/C/W/635  
 
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  (export) markets and thus positively contribute to international trade.4 International 
cooperation of IPRs can help to reduce transaction costs5 which again promotes  trade.  
2. As was demonstrated in the co -sponsor submission "Intellectual Property and Innovation 
2017: Inclusive Innovation and MSMEs "6, an adequate IP -protection strategy  supports  
MSMEs  in securing  a competitive advantage on the global m arket.  In fact , many 
businesses have developed specialized production methods and/or products that led to 
an implicit unique selling proposition (USP). However, USPs for specific technology, 
products or production methods can only be maintained and exploited if the under lying 
IP is properly and credibly protected.  
3. Therefore IPRs can provide the legal means to exploit one's  comparative advantage  by 
providing exclusive right protection to help MSMEs in the competition with much larger 
companies . IPRs help create and maintai n added value and can open up export 
opportunities to the local economy . Further,  international licensing can generate new 
revenue streams.7 Also, the licensee can benefit from superior technology to produce 
better quality products. This can make it possib le for MSMEs to better market and trade 
their products.8 
4. Trademarks allow producers  to differentiate themselves and their goods from  their 
competitors . Along those lines, another important IPR is  geographical indications  (GIs), 
which are  signs used on good s that have a specific geographical origin and possess 
a certain quality, reputation or characteristics which are essentially attributable to that 
origin. Trademarks  and GIs  can help  increase the level of information about the traded 
products for consumers  and also enhance trade possibilities  for MSMEs . As for patents, 
the trade opportunities for MSMEs lie in the trad eable property right which promotes  new 
market opportunities and give MSMEs national and international trade certainty and 
reduce the risk of free riders. Finally, trade secrets are a common form of IP created and 
possessed by MSMEs. Protecting and enforcing trade secrets against misappropriation 
support MSME's interest in exploring international markets . 
5. Publicly available and searchable record s that identify what IPR s have been granted in 
certain countries are an important resource for MSME. These records, such as a patent 
or trademark database, may assist MSME identify new markets and licencing 
arrangements.  
6. A variety of different strategies and support measures may be discussed  and applied by 
Members, in order to encourage and help MSMEs  benefit from trade opportunities in 
the use of the IP -system. For the IP -system s uch measures comprise, for example:  
i. Awaren ess creation of commercial relevance of IP for export -oriented creative 
and innovative MSMEs: Creating value - adding value - protecting value  
ii. Supporting MSMEs in developing international IP -protection strategies  
7. Members are invited to share domestic exper iences and examples of successful 
measures promoting inclusive innovation and MSME trade – in particular, how IP 
frameworks and innovation policy or programmes have assisted MSMEs to help MSMEs 
integrate into glob al value chains.  
                                                
4 Hassan, E., O. Yaqub and S. Diepeveen (2010) 'Intellectual Property and Developing Countries '. RAND 
Corporation: Santa Monica, CA.  
5 Primo Braga, C.A. and C. Fink (1997) ' Economic Justification for the Grant of Intellectual Property 
Rights: Patte rns of Convergence and Conflict' . Chicago –Kent Law Review 439(72): 439 –62. 
6 See IP/C/W/622.  
7 WIPO,  'Licensing of Intellectual Property Assets ; Advantages and Disadvantages ', 
http://www.wipo.int/export/sites/www/sme/en/documents/pdf/licensing.pdf , August 2017.  
8 Ibid. IP/C/W/635  
 
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  Guiding questions : 
a. Which I P-related measures taken by Members have been particularly conducive of 
supporting MSME trade activities ? 
b. Which specific IP protection strategies and policies for MSME have proven successful in 
helping them int egrate into the global economy?  
c. In which export sectors have MSMEs been successful in increasing their shares of exports 
relative to large -scaled enterprises, due to having developed an IP -strategy?  
 
For any questions or  comments, please contact the Swiss Delegation at  
marine.willemetz@seco.admin.ch . 
 
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