Small and medium enterprises ("SMEs") are the backbone
of any economy as they employ workers, utilise local resources,
attract investment, and encourage innovation and creativity.
The UAE is no different, with SMEs making up the major form of business here. SMEs in Dubai constitute around 50% of the total number of businesses and provide jobs for around 60% of the labor force.ą In light of this, the UAE government is encouraging SMEs, and a federal law regulating SMEs activities has recently been drafted.
The core business of many SMEs is based on simple but innovative ideas for products or services, creative designs or trade secrets. These constitute intangible assets that can be more valuable than tangible assets if protected as intellectual property rights and utilized appropriately. However, many SMEs ignore these rights, mostly because of a lack of knowledge or because of the costs involved. Here, we will highlight the importance of intellectual property rights to SMEs.
The protection of intellectual assets can be realized through different forms of rights including:
Trademarks: A brand is the identity of a business and its products or services. A trademark can be obtained for any distinctive words, signs, letters, colors, pictures, numbers or any combination of the same. To obtain a trademark right an official registration should be made at the Trade Mark Registry of the Ministry of Economy.
Patents: These can be obtained for any innovative, new and industrially applicable inventions. To obtain Patent rights an official registration should be made at the Patent Registry of the Ministry of Economy.
Industrial Designs: These can be obtained for the novel and ornamental or aesthetic aspects of an article, such as the shape of an article, patterns, lines or colors. Industrial designs relate to aesthetic features, and not technical features. To obtain Industrial Design rights, an official registration should be made at the Design Registry of the Ministry of Economy.
Copyright: This can be obtained for original works such as books, computer software, plays, architectural work, photography, maps, charts and others. Copyright can be obtained without the need for any formal registration, however, the deposit of the work at the Ministry of Economy would displace the burden of proof of copyright ownership in any legal proceedings.
Trade secrets: These can be any type of information that is not generally known or reasonably ascertainable, and by which a business can obtain an economic advantage over competitors or customers. Trade secrets could be formulas, practice or customers list. No formal registration of any kind is required to obtain trade secret rights.
The first step for any SME is to identify the intellectual property assets available and work to acquire the rights and protect them. By investing in such protection, the SME will obtain exclusivity over these rights, which means being able to prevent others from using the same rights. In this context, it is vital that SMEs invest in protecting their main intellectual property assets and by developing an appropriate strategy depending on needs of the business.
It is also necessary to carefully manage and maintain these exclusive intellectual property rights in order to develop their value. For example, SMEs should use their registered trademarks appropriately and in all their marketing activities to develop stronger trademarks and enhance their value (this is, of course, in addition to maintaining the quality of products or services provided under this trademark). With regards to trade secrets, SMEs should take strict measures to keep them confidential otherwise they will lose their value. Furthermore, it is important to monitor the market to ensure that these intellectual property rights are not infringed and to take necessary measure to stop any infringement.
By protecting and maintaining these intellectual property rights, an SME will be able to better exploit these rights. Exploitation could be through the use of these rights by the SME itself or by licensing or franchising to others as a means to expand their business. If SMEs have well-protected intellectual property rights, this will increase their negotiating power and allow them to obtain better prices for their offerings.
An important fact about intellectual property rights that may not be known to SMEs, is that these rights could be financial assets against which SMEs can obtain credit. For example, trademarks, patents and designs could be subject to mortgage.
Intellectual property rights enable SMEs to have exclusivity over the exploitation of their brands and innovations, therefore improving their profits and competitiveness. However, in order for intellectual property rights to improve the competitiveness of SMEs, appropriate strategies should be developed to identify, acquire, maintain, exploit and enforce these rights.
1. Mohammed Bin Rashid Establishment for SME Development, Definition of SMEs brochure 2009.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.