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Patents are “worthless”, says SME body

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The chairman of the SME Innovation Alliance, a body set up to represent SMEs in the tech and science sectors, has sent an open letter to Vince Cable, the business secretary, and chancellor George Osborne,  in which he decries the currently “unfair” intellectual property (IP) framework for SMEs.

John Mitchell wrote: “A false assumption is made that an SME holding a patent will have ‘protection’ for their related investment in R&D and any resultant innovation. But for high tech SMEs – the main source of new businesses tomorrow – a patent is almost impossible to enforce.”

The SME Innovation Alliance is calling for “immediate change” from the government, to ensure SMEs’ innovations can be more easily protected.

“Although no one likes to hear the truth about how the big businesses of today can simply hi-jack British inventions taking billions from our economy and many jobs, action is required to rectify matters,” he wrote.

Patent protection costs

The SME Innovation Alliance also made recommendations for what the government should do.

The main issue that face SMEs is the huge costs associated with protecting their IP, John Mitchell told the Telegraph.

In particular, the principle of security for costs – which allows defendants to ask that claimants pay a sum into the court up front to cover costs if it loses – allows large companies to breach IP rights and then assemble an expensive legal team that a small company couldn’t ever dream of paying for, forcing the abandonment of any legal attempt.

“The UK patent system allows infringers with deep pockets to copy innovations knowing a legal challenge is unlikely,” he said.

Mark Sheehan, president of the Institute of Patentees and Inventors, and inventor-in-residence and the British Library, agrees that change is necessary.

“It’s over expensive. No inventor of SME has the clout to take on large corporations. We need a better system.

“They’ll spend a small fortune on protecting their IP and come down on you if you go anywhere near their patents, but large organisations have no soul when it comes to SMEs’ IP.”

Patents are a hot topic for entrepreneurs and SMEs. Just this week, ten European nations wrote a letter to the European Commission lobbying for a European-wide patent. The hope is that this will bring costs down and help businesses protect their IP.

And earlier this year, in September, a cap on IP litigation costs was introduced in county courts for the first time, making litigation more accessible to SMEs.

You can read John Mitchell’s letter to George Osborne and Vince Cable below.

Download and read the letter here (PDF, 400KB)

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