434. Intellectual property rights (IPRs) play a crucial role in catalysing innovation and creativity, promoting economic growth and development, creating jobs, improving the quality and enjoyment of our lives, and combatting the manifold challenges we face as individuals, as nations and as a global community.
435. In today's knowledge society, the European Union thinks that innovation is a key asset. For many countries, it is a more valuable source of growth and wealth than natural resources - which are increasingly scarce.
436. The impressive development and growth of many countries, relies to a large extent on innovation and technology. An effective IPR system is crucial to promote innovation, as it makes it possible to protect intellectual assets such as inventions and brands, but also music, literature and agricultural products, which are as relevant for developing as they are for developed country Members.
437. Therefore, insofar as IPR regimes are concerned, legal certainty is important in encouraging innovation and investment, which underlines the need for stable and predictable IPR regimes, domestically and internationally.
438. It is clear that IPR regimes need to be properly balanced, and this has been a central concern throughout the history of IPR, with frequent controversy regarding how exactly to achieve such balance. But ultimately, there is very broad agreement about the central role of intellectual property in a knowledge based society to ensure, competitiveness, scientific progress and access to culture.
439. It is therefore not surprising that the fostering and development of intellectual property rights has become one of the crucial areas of policy initiatives in the development of a growth conducive business climate, in particular with regards to start-ups and other forms of new businesses.
440. The key role of intellectual property in the success of start-ups and innovative new businesses has long been recognized. It allows innovative businesses to profit from the results of their creativity, inventiveness and R&D investments, and creates an incentive for further investment in innovation.
441. Given that knowledge-based parts of the economy in developing and developed country Members is made up of businesses whose most valuable assets are intangible, innovative and creative startups need to be aware of the advantages of using IP and the dangers of neglecting it. Among other reasons, to better assist those companies in this regard, the European Commission set up the Executive Agency for Small and Medium-sized Enterprises, which manages the vast majority of the European Union programmes designed for SMEs and new business to help them innovate and do research.
442. In the Single Market Strategy, the Commission announced in 2015 that it would come forward with European Union-level measures to support the use of IP by SMEs and start-ups. Honouring that commitment, the Commission is putting in place a package of IP-support measures for start-ups, aiming at improving coordination and consistency in addressing sub-optimal use of IP across the European Union. This package was presented together with another Communication titled "Europe's next leaders: the Start-up and Scale-up Initiative". The Communication aims at enhancing a coordinated approach across the European Union policies through a set of pragmatic measures in order to boost innovation and research with the involvement of new businesses.
443. The measures include:
Streamlining European IP awareness schemes for new businesses and providing a cooperation platform for European Union Members;
Developing a European Union IP mediation and arbitration network;
Encouraging the creation of European-level insurance schemes for litigation and IP theft, building on a common IP valuation method; and
Improving coordination of IP support funding schemes, including by means of a possible guidance to Members and by developing monitoring methods their impact.
444. Working in partnership with all levels of Government in European Union Members, regions and cities and all stakeholders - including start-ups and scale- ups themselves - is necessary for the efficient and successful implementation of initiatives intended to help new business and allow them to approach the complex matter of IP more effectively.
445. In recent years, the European Commission and European Union Members have supported the creation of 'communities' to help start-ups connect with potential partners (e.g. investors, business partners, universities, research centres) through events, platforms, business clusters, networking and supportive local/regional 'ecosystems'.
446. At European Union level, the Start-up Europe initiative has emerged as a recognized brand for creating links between those ecosystems, focusing on connecting people, international outreach and providing information through a One Stop Shop for start-ups. Start-up Europe also helps new businesses, in particular, through matchmaking between investors, corporates and entrepreneurs as well as networking of regional decision-makers.
447. Start-up Europe's objectives are:
To reinforce the links between people, business and associations who build and scale up the start-up ecosystem (e.g. the Web Investors Forum, the Accelerator Assembly, the Crowdfunding Network);
To inspire entrepreneurs and provide role models; and
To celebrate new and innovative start-ups, help them to expand their business, and give them access to funding under Horizon 2020, which is the main research and innovation framework programme of the European Union.
448. To mention one of these European Union-level initiatives particularly relevant in the context of IP, the Web Investor Forum brings together top-level Investors and Accelerators from all over Europe with the goal to foster a more scale-up-friendly ecosystem. The Investors Forum acts as an internal channel conversation for the European Investment Fund and European Commission with European and international investors. Specifically, the Investors Forum bridges investors to Corporate Development Heads, like the Start-up Europe Partnership, European Matching Funds and the European Commission.
449. Intellectual property rights play an increasingly important role in corporate strategy and financial investment. The intangible assets created through the processes of innovation represent a major share of the value of today's businesses. The IP rights associated with those assets are the legal underpinning for potential returns on investment in that innovation.
450. The European Expert Group on Intellectual Property Valuation assessed the commercialisation of innovative ideas, with the value of the IP asset acting as collateral. They looked especially at start-ups. Equity investors typically invest into companies as a unit, but not into IP assets as such. In return for their investment investors receive an equity stake of a company which owns IP and intends to exploit the IP. Therefore, investors using this model are indirectly financing based on IP.
451. The Expert Group notes that an issue which influences a company's decision to protect its IP, especially in the case of new business, is to what extent such rights are enforceable, the time and costs involved in litigation, and the foreseeable economic results. The quality of the enforcement system has an important impact in IP protection. Companies need to be assured an accessible justice system for infringement, validity and other cases.
452. Large investment banks and private equity firms alike have raised and invested funds targeted at IP and other intangible assets. Rather than looking for entrepreneurs and start-up companies, these firms are often looking to invest in IP for development and commercialization purposes. These enterprises work with companies to either buy the IP or invest in the company for commercialization of the IP.
453. The PATLICE Survey enquired about European firms' patent licensing activities and found financial use is very important for small companies. There is a significant difference in the use of patents to obtain funding and finance by start-ups compared with larger firms. All types of finance uses are much more important for start-ups than for large firms. They particularly use patents more for raising capital through private investors and Venture Capital and private equity.
454. To conclude, we would like to underline that transparent and predictable intellectual property rules assist start-ups to engage confidently in domestic and international markets. Intellectual property rights can provide the framework for ownership, protection and the use of ideas and knowledge created in Europe and beyond.