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Tap into the often neglected business linkage between intellectual property rights, SMEs
Author, Anthony C Kakooza. PHOTO/FILE
What you need to know:
- Mr Anthony C Kakooza says: ...this law makes it possible for individuals and companies to use their IP as security for loans.
Yesterday, the world marked the World Intellectual Property Day. This year’s theme was Intellectual Property (IP) and SMEs (Small and Medium sized Enterprises): Taking your ideas to the market’. The focus of IP on SMEs should be quite obvious and yet is often neglected. Here is why: Intellectual property is basically as a result of creations of the mind.
As such, technically the first step in coming up with a business, starts in the mind. The next step, which involves generation of the idea and structuring how it is going to be implemented, all the way into generating profit out of it, involves various manifestations of IP rights. Such IP rights are quite separate but intertwined with the business generated and are therefore a separate valuable resource in themselves. So, much as one can be able to develop a business idea and make money out of it, there is IP attached to that business which can also generate more money for the business owner if it is tapped into and well utilized.
Let us take an example of Rose Twine – the brain behind Uganda’s environmentally friendly Eco Stove. Twine’s appreciation of the market demand for her product is well reflected through the increase in supplies of the stove . This is clearly a good example of an SME that has clearly tapped into the relevance of IP in leveraging the growth of the SME’s products and services.
The Eco Stove registered for and was granted IP protection by the Uganda Registration Services Bureau (the Government IP Office) for a utility model. This is one type of IP protection that is given in as long as the application shows that the innovation is new and is industrially applicable. Such protection is granted for a maximum of 10 years.
Secondly, the Eco Stove has been granted trademark protection for its brand. The trademark enables Eco Group Ltd’s customers to distinguish its product from any other similar product in the market. The trademark protection initially runs for seven years and, upon renewal, can run for 10 years indefinitely, in as long as it is renewed every 10 years and is still in commercial utilization.
As such, the utility model and trademark protections granted by URSB for the Eco Stove mean that no competitor can come up with a similar product while the utility model protection is still running.
Secondly, Eco Group Ltd can enjoy brand recognition through trademarking the Eco Stove across the country. The extra beauty about the value in the IP, is that the company can be able to negotiate license or franchise agreements with other companies that wish to make similar stoves both within and across the national borders. All that the company would have to do, is grant such companies limited access to the eco stove technology as well as grant them permission to use the SME’s trademark in exchange for a monetary consideration termed as a royalty payment which is either paid in lumpsum or on agreed upon regular instalments.
Well-structured and negotiated IP license or franchise agreements can help SMEs generate a substantial flow of royalties for their innovations and creativity.
Furthermore, well organised bank records of the company that reflect a consistent flow of royalties based on the utilisation of the company’s IP can also attract financial institutions into granting loans to the company using the IP as collateral. This is thanks to the Security Interests in Moveable Properties Act of 2019. This law makes it possible for individuals and companies to use their IP as security for loans.
The above illustration on the utilisation of IP in the stove, goes to show how far the existing business linkage between IP rights and SMEs can be fully exploited.
The application of the IP linked to SMEs can improve their competitiveness in the market and help generate more revenue from their products and services.
The 3rd National Development Plan (NDPIII), which covers the period 2020/21 to 2024/25, is pursuing a strategy of expanding markets for increased demand of locally produced goods. This is in line with the Buy Uganda Build Uganda (BUBU) Policy of 2014, whose vision is “to develop a vibrant dynamic and competitive private sector that transforms local products through the value chain to meet the required standards”. SMEs should therefore seize this opportunity in the national development arena through exploitation of the IP generated from their BUBU products and services so as to spur greater economic growth from the homestead to the national level.
The Uganda Registration Services Bureau, which not only serves as the government IP registration office but also the Business registration office, should continue encouraging SMEs to also look into registering IP rights, especially trademarks linked to their businesses whenever they are in the process of registering such businesses.
Unfortunately, it is normally in the early stages of business generation, when the excitement is still at its peak that the IP linked to such businesses risks being stolen. Business owners should therefore utilize the technology and Innovation Support Centre at URSB to ensure that there is no likelihood of theft in the IP in their SMEs as well as work with IP experts in signing Non- Disclosure Agreements with other stakeholders that are given exposure into their businesses at the early stages of operation.
Such measures will, in the least, generate a fencing system over the IP attached to SMEs as their businesses slowly develop. With the utilisation of these and other actions, SMEs will have a better appreciation of the value of IP rights in their businesses as they take their ideas to the market.
Mr Kakooza is an Intellectual Property law practitioner and Lecturer.
kakooza@[email protected]
