254. The European Union delegation is pleased to co-sponsor this agenda item together with the Delegations of Hong Kong, China; Japan; Singapore; Switzerland; Australia; Chinese Taipei; Canada; the United Kingdom; and the United States of America.
255. We thank in particular the United States of America for its active role in the drafting of the document submitted today to the TRIPS Council. We also thank them for their full and constant involvement in the coordination of the Group. The Intellectual Property Rights (IPRs) play an increasingly important role in corporate strategy. The intangible assets created through innovation and creation represent a major share of the value of today's businesses.
256. At the last TRIPS Council in March, we focused on the access to finance and the role of IPRs, notably for the SMEs. On this occasion, we mentioned the EUIPO SME scoreboard of 2019 which states that only 13% of SMEs owning IP rights tried to use intangible assets to obtain finance: 9% successfully and 4% unsuccessfully. Additionally, only 25% of medium-sized IPR owners have professionally valued their intangible assets, and this drops to 20% for small and micro-sized IPR owners.
257. The IPRs associated with intangible assets are the legal guarantee for potential returns on investment in innovation and a means to get funding. IP assets are economic resources that have no physical presence and can include patents, trademarks, trade secrets, designs, or copyrights. Just like other assets owned by a company, IP assets have a value. Such assets have the capacity to be converted into higher profits and value for the company. However, quantifying that value can be a challenge, notably for SMEs, and the valuation of IP, in particular industrial property, remains a major obstacle to IPR being considered as tradable assets, ready to be licensed.
258. The EUIPO, through its European Observatory on Infringements of IPRs has carried out some EU-wide studies on the subject of IP and financing, notably one dedicated to the licensing activities by SMEs. This Study focus more on trademark and design but other IPRs are covered, notably patent and copyright. It is worth noting that generally the studies or other surveys tend to focus on the large companies, ignoring the smaller firms, which are the backbone of the EU's economy. SMEs in general do not have a stock price or market valuation, this is why the valuation of IPRs in the EUIPO study is based on the objective results of a survey administered to SME owners of IPRs.
259. The general conclusion is that the economic benefit derived from licensing IPRs can be used to calculate the capitalised value of the IPRs as the total income expected to be realised over its economic lifespan. The revenues obtained from licensing any IPR is an annual flow received by a firm and can be used to estimate the value of the intangible asset represented by the ownership of the IPR. As said the capitalised value of an asset is the total income expected to be realised over its economic lifespan.
260. Licence agreements concluded by the European Union SMEs include mainly the use of European Union Trademarks (EUTM), but not only. The average total annual revenue from licence agreements (some firms declare more than one type of agreement) is in terms of annual averages EUR 68,929 per firm during the period 2013-2017. SMEs in the service sector are more likely to license out their EUTMs and earn higher revenues from those licences, both in absolute terms and relative to average turnover, than firms in the manufacturing and trade sectors.
261. Licences by micro firms represent a high share of their average turnover (around 29%) and are thus an important revenue source for such firms. The annual licence agreement is the type of licence associated with the highest annual revenue, followed by multiyear agreements and royalty deals. The annual estimated average revenue from licensing an EUTM during the period 2013-2017 is EUR 64,924, equivalent to 5.7 % of the average turnover for SMEs in the European Union. The estimated annual revenues from licensing out EUTMs during the period 2013-2017 by all SMEs is EUR 1.9 billion. The gross capitalised value of EUTMs licensed by SMEs along their entire expected life is EUR 38 billion.
262. I would like now to describe briefly one of programmes managed and financed by the EU which will aim at making the IP licensing more efficient: Toolbox for efficient IP licensing for market uptake and societal value creation (CSA). IP and use of different types of collaboration contracts, licenses and pooling agreements are key elements of the process by facilitating technology sharing, increasing scaling up and thereby creating new capacities and industries.
263. In line with the EU IP Action Plan and the Report on an IP action plan to support EU's recovery and resilience by the European Parliament, this action will promote better IP management in research and innovation in view to materialise excellent research into innovation that is benefitting the society and businesses in the EU.
264. The proposals included in this Toolbox are expected to contribute to promote effective use and deployment of IP ensuring easier access to and sharing of IP-protected assets. It also provides models to improve the preparedness to respond to future emergencies via efficient technology licensing.
265. This IP toolbox will help companies, public research organisations including universities and the relevant intermediary entities to establish quick and efficient co-operation and licences with businesses, as well as practical examples of incentives which can motivate private sector to commit voluntary licensing for other areas e.g., climate change emergency.
266. This action will harvest the lessons learned as well as practical experiences and assess how these new practices and tools could be transferred to other emergencies e.g., addressing climate change effects (floods, droughts, fires etc). and helping the society to increase preparedness for any future emergencies.