Empowering SMEs to leverage IP for innovation

• Author: Frank Tietze
• Position: Head of IP Management (IIPM) Laboratory, Department of Engineering, University of Cambridge, United Kingdom

Understanding the power of IP, Nutriset, which aims to provide nutrition to vulnerable groups in least developed countries, established a franchising model through which local manufacturing plants have been established in West Africa, creating 400 permanent jobs. In 2020, alone, Nutriset benefitted 1 million children. (Photo: Courtesy of Nutriset)

Intellectual property (IP) in its different forms, ranging from patents and trademarks to design rights and copyright, is of great importance to SMEs. A number of studies show that firms in general, and SMEs in particular, perform better when they pay attention to their IP. Arguably, IP makes all the difference, in particular, to the fortunes for Gazelles (ambitious, high-growth SMEs); startups when they are younger; and large firms, when they are successful. Let’s take a few examples to illustrate how IP has made a difference.

Studies show that firms in general, and SMEs in particular, perform better when they pay attention to their IP.

SwiftKey

SwiftKey is an artificial intelligence (AI) company founded in 2008 by alumni from the University of Cambridge. In 2016, the then-SME was acquired by Microsoft for USD 250 million. Of course, there are many reasons for this huge valuation, but I find it hard to imagine that the founders would have achieved such an exit if they had not paid attention to IP. Interestingly, in 2013, SwiftKey hired Gareth Jones, an experienced IP manager who brought experience from two IP savvy companies, Vodafone and IBM. Some might have questioned SwiftKey's decision to hire an IP person at great cost at the time, but I would argue that it was a really smart decision; the investment certainly paid off. Mr. Jones was hired to look after SwiftKey’s IP so it could withstand the due diligence processes that multinationals run to scrutinize acquisition targets. When I heard about this case, it reminded me of a visit to the Venture Unit of the Volvo Group in Sweden in my student days. During the visit, the head of the Venture Unit at that time told me that they quickly lost interest in acquiring an SME if it could not demonstrate that it had secured its IP in relevant markets globally. So, while difficult to prove, my guess is that although SwiftKey may have managed to sell its company to Microsoft or another multinational without its IP in order, it certainly would have done so at a much lower price. My guess is they would have been able to sell it for around USD 50 million...