Why Small & Medium Scale Companies Don’t have Negotiating Power. Must read article.
Multinational companies like Intel, Qualcomm, and Fiat have primarily grown on the shoulders of their scientific and technological innovations. Intel, for example, worldwide holds 70,000 patents. Qualcomm has 140,000 granted and pending patents across 100 countries.
Technological innovation at an organizational level requires concerted R&D. Google spends roughly around $ 21.42 billion on R&D. Automaker Toyota spends over $ 10 billion on R&D yearly.
Once they have innovated and discovered how to solve problems, they patent their innovations.
But the focus of this article is not how big organizations benefit from R&D and intellectual property rights but how SMEs and small businesses can tremendously grow by allocating resources to developing new concepts and technologies and then getting them patented.
What is a patent, right?
A patent is an exclusive/statutory right granted by the government to the Inventor/Applicants in exchange for complete disclosure of this invention for a limited period of 20 years. This means the patentee can stop manufacturing and selling in India and take legal action in case of any infringement.
A patent is essential to prevent competition and have negotiating powers. As you have a 100% monopoly on your invention, it’s your task how effectivity you can use it.
The importance of getting patent rights for SMEs
Although there has been a massive push from the government to encourage small and medium-sized enterprises to innovate, innovation among SMEs has been accidental. There are also some financial benefits. Still, SMEs are primarily busy running their day-to-day operations and maintaining a cash flow that can keep them afloat.
By chance, they discover something and then try to protect it. Otherwise, there is no strategic focus on R&D, nor do they have teams for developing new technologies. The concept of applying for patents comes much later.
Even if they have good facilities, they don’t have negotiating powers. They are puppets in the hands of the vendors or the bigger companies they collaborate with. Other vendors decide on terms and conditions. Even pricing is decided by bigger business partners, leaving little leeway for the SMEs to extend their wings and fly higher.
Due to things not being in their control, their innovations don’t attain their full potential. Pressed against the wall, these original equipment manufacturers have no other option but to use technologies from the MNCs and put their innovations on the back burner.
Can they have a permanent solution?
Getting a patent is crucial. There is no other option but to innovate and develop their original products. Of-co This takes effort. It also takes investment. But once they have their product or technology, and once the product or the technology is patented, they have a greater negotiating power.
For example, Qualcomm and Intel; many companies use microchips on their computers and mobile phones. These Mobile Companies brand their phone with these companies’ chip sets. Isn’t that fantastic?
Similarly, vehicles are branded by the Engine that are installed in them.
SMEs play an essential role in the Indian economy. As per government sources, the SME contribution to the GDP is around 30%. There are 36 million SME units in the country. This sector employs almost 40% of India’s workforce. Among overall SMEs, 31.7% of SMEs manufacture products (source).
The biggest growth hurdle many SMEs face is a lack of their own technology or product; even if they have their own technology or product, they’re not aware of the implications of not getting them patented. They are losing unimaginable revenue because they haven’t patented their innovations.
Awareness must be raised among the SME sector about the importance of R&D and Patent and better ways to generate revenue from Patenting and
How can these patent rights be used to create a solid base for small and medium-sized enterprises?
Brainiac’s expertise is in building a strong IPR & Patent portfolio that reduces competition and helps in generating more profits.
Think over, strategize and dominate you negotiations
