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EUIPO – EPO Study: Trademarks and Patents Boost Startups’ Ability to Secure Funding

18-Oct-2023 | Source : The European Union Intellectual Property Office (EUIPO) | Visits : 909

ALICANTE - A new joint study by the European Union Intellectual Property Office (EUIPO) and the European Patent Office (EPO) finds that intellectual property (IP) rights are a significant factor in the success of European startups. The report shows that, on average, startups that apply for trademarks and patents rights prior to their initial seed or early growth stages are up to 10.2 times more likely to successfully secure, according to the official website of the European Union Intellectual Property Office (EUIPO).

On average, 29% of European starts-ups have filed for an IP right, with important differences between industry sectors. Biotechnology is by far the most IP-intensive sector, with 65% of start-ups using patents or registered trademarks. Other IP-intensive sectors include science and engineering (with 25% of patent users and 38% of trademark users), health care (20% of patent users and 40% of trademark users) and manufacturing (20% of patent users and 36% of trademark users).

Finnish and French startups lead the way in the use of IP rights

There is significant variation in the use of IP rights among European countries. Finland and France have the highest percentage of startups with an IP filing at 42% each. Startups based in Germany (40%), Austria (40%), Italy (39%), Norway (37%), Sweden (34%), Denmark (34%), Switzerland (32%) and the Czech Republic (31%) apply for more IP rights on average. Companies from those countries are also the most likely to file trademark and patent applications, and to bundle the two IP rights. This is especially true for startups from Austria, Switzerland, France and the Nordic countries.

The importance of intangible assets for startups

The ownership of European patents and trademarks is associated with an even higher advantage, with a rate of securing early-stage funding exceeding five times that of national IP rights (6.1 times more likely for trade marks and 5.3 for patents). The so-called “deep tech” startups have particular challenges when developing breakthrough technologies, as they require large investments and long lead times. Such startups can benefit especially from patents and trademarks to attract “patient” investors.

“Intangible assets represent the vast majority of the value of a business today, and formal intellectual property rights, such as trademarks, are not only legal safeguards for investment in intangibles, but the key to securing financing and collaborations”, said João Negrão, the Executive Director of the EUIPO. “This is especially important for newly started, innovative companies, who typically have few assets at the initial stage aside from their intellectual capital.”

Biotechnology the most IP intensive sector

In terms of sectors, biotechnology is the most intensive for both patents and trademarks, with almost half of Europe’s biotech start-ups applying for one or both of the IP rights. 48% of biotech startups have filed for a patent and 47% have applied for a trademark. This is the sector with the highest percentage of startups having applied for both a patent and a trademark at 31%. The sector with the second highest proportion of startups owning IP rights is science and engineering (16%), with 38% of the companies applying for a trademark and 25% filing a patent. The results are similar in healthcare and manufacturing, each with 30% of companies registering for either a patent or a trademark.

Growing startups show intensifying IP ownership

The report shows that, as startups grow, their usage of intellectual property (IP) rights, particularly European IP, intensifies. In seed-stage funding rounds, 10% of startups have filed for patents, increasing to 28% in early growth and 44% in late-stage rounds. Trademark use follows a similar trajectory, starting at 28% in seed stage and escalating to 72% in late-stage rounds.

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