Intellectual property is a largely unknown but increasingly important area for Estonian companies.
Siim Kinnas, Head of Technology Transfer Services at EAS, shares his thoughts on what companies should know about intellectual property, how to protect it and how to use it in business. What do the following transactions have in common?
2012.
In 2012, Microsoft paid $1 billion to technology company AOL.
Some time earlier, Motorola received $12.5 billion from Google.
In a famous auction, Apple, Microsoft and four other companies put their backs together and paid $4.5 billion to a bankrupt Canadian telecoms company.
The answer: all the deals involved patents, i.e. the specifications and rights to use technical solutions that are essential to the business.
“Intellectual property is the area where our companies have the most untapped resources and growth opportunities,” said Siim Kinnas.
Specifically, industrial property – trademarks, inventions/patents and industrial design solutions and their commercial applications.
For example, with a patent, an entrepreneur can protect his unique value proposition from competitors and can prohibit or allow other companies to use the solution, technology, equipment material, etc. he has developed, for example in return for a licence fee.
“It allows a company to generate revenue without producing the service or product itself,” explained Kinnas.

Three main strands

“The protection of intellectual property has three main objectives -.
(a) to protect and enhance the competitiveness of businesses in a market where cheapness is no longer an argument.
(b) to ensure the freedom of firms to operate in markets where their competitors may already hold patents, trademarks and other intellectual property that is an obstacle to their activities; and
c) to sit at the negotiating table as equal partners, even with large and powerful competitors,” Kinnas lists.
A company should consider for itself, taking these three applications into account, how much market share it would be able to gain and maintain with or without protecting its IP – put simply, the monetary difference between the two scenarios is the value of the company’s IP.

Protecting your competitive advantage in a rapidly changing marketplace

Protected intellectual property helps to boost a company’s competitiveness by allowing it to charge a higher price for its products or services.
On the other hand, it provides an opportunity to protect your business model, for example, in the event that someone else should start offering the same product or service.
“Patenting reduces the risk that a competitor will patent your product or service before you do, thereby hampering your business,” explains Kinnas. So it’s no wonder that large technology companies apply for thousands of patents a year. “Patenting sends a signal to the other party that your idea is protected and, if necessary, allows countermeasures to be taken,” Kinnas stressed the importance of thinking about intellectual property right from the start of the development process.
Protected intellectual property gives the owner the right to go to court if someone has stolen or copied his work without permission.
For example, in 2020.
In 2020, Iglucraft, an Estonian creator of evergreen saunas, took a Latvian company to court for copying its sauna design, website photos, imagery, content and trademarks.
Thus, in addition to the protected design, the Latvian company also infringed Iglucraft’s copyrights and, as a result of the litigation, had to stop all copying of the sauna, pay compensation and cover the Estonian manufacturer’s legal costs.
In Kinnas’s experience, small companies often make the mistake of sharing their ideas before they have been protected and then find themselves in a situation where someone has made their ideas a reality.
Often there is nothing more to be done – you can’t get a patent for an idea that has already been made public.

Preserving freedom of action

In particular, those operating in, or seeking to enter, technology-intensive markets should not forget that even if they do not think about intellectual property, there are enough competitors in the market, some of whom may already have patents or trademarks registered that effectively preclude entry into that market.
And if they do enter, the result can be expensive litigation and the associated economic costs.
To this end, the need to ensure that the company is free to act in relation to third party rights should be borne in mind before entering markets, but also during development.
“A Google search is not enough to find your company’s competitors, you need to do an informed search of the relevant databases,” warns Kinnas.
Often a patent is taken out on a solution years before the product is released, so the marketing material that Google mainly sees does not include this information.
A very rudimentary search for valid patents could be done by the developer, for example using the European Patent Office’s free tool, Espacenet.
In the later stages of development, the EAS/Kredex technology intelligence service, which is also mostly free for companies, might be of a little more use.
But the most thorough analysis should be done before a new product is launched and should be carried out by experienced experts familiar with the company’s field, such as patent offices with international experience.

The great balancer

“Intellectual property is a great equalizer – skilfully protected intellectual property balances the influence of the parties at the negotiating table, helps to increase the value of the company and to earn revenue from its ideas,” Kinnas stresses.
Even a small company can feel confident to enter into negotiations with a large company if its IP position is secure.
However, this assumes that the so-called ‘goodwill
This assumes that the small company has achieved a high level of IP hygiene – that the intellectual property has been identified, registered and trade secrets marked and covered by confidentiality requirements.

Expert advice to avoid mistakes

The first mistake companies make is failing to protect intellectual property before it is made public. “Our companies need to do more to appreciate the economic value and importance of intellectual property. Think what would happen if some of your knowledge or technology fell into the hands of competitors? What impact would that have on your sales figures and market position?” Kinnas asked. Another big mistake is forgetting that intellectual property is only protected in countries where the patent is registered. In fact, our companies often register their intellectual property only in Estonia. Kinnas therefore stresses that it is important to carefully consider your target markets and future plans. In this way, you can avoid a situation where a competitor may suddenly appear on a new market offering the same product or service and the patent registered in Estonia means nothing. Intellectual property is particularly important in the long term, so it is always worth thinking 5 to 10 years ahead. Intellectual property is an extremely complex area, and as it is the responsibility of each company to monitor it, Kinnas recommends seeking expert advice. “This is particularly necessary for high-tech companies,” he says. To help companies, the Entrepreneurship and Innovation Foundation offers strategic advice on intellectual property. The service will also refer companies to appropriate service providers in the private market, if necessary. Ultimately, intellectual property should be treated like any other company asset. In the same way that you lock the shop door when you close it, you should also protect your intellectual creation by ‘locking’ it using the various tools of intellectual property. The EAS/KredEx Joint Agency provides strategic advice on intellectual property, helping companies to manage and protect intellectual property effectively. Read more and come for strategic advice on intellectual property rights

The story was originally published on the EAS-KredEx website, 26.
October 2023